/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/091015.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Thursday, October 15, 2009, Vol. 10, No. 204 Headlines A U S T R I A ANDREAS BRAUN: Claims Filing Deadline is November 3 KOMMUNALKREDIT AUSTRIA: Moody's Cuts Bank Strength Rating to 'E' B U L G A R I A * BULGARIA: Corporate Bankruptcies Up 141% in September 2009 F R A N C E BELVEDERE SA: Court Defers Decision on Rescue Plan Until Nov. 10 G E R M A N Y ARCANDOR AG: Metro May Drop Plan to Buy Karstadt Stores ARCANDOR AG: Sal. Oppenheim to Further Reduce Stake DEUTSCHE HYPOTHEKENBANK: Fitch Affirms Junk Ratings on Three Notes GENERAL MOTORS: German Workers at Opel Unit Agree to Wage Freeze QUOKKA FINANCE: Moody's Cuts Rating on Class E Notes to 'B1' G R E E C E DRYSHIPS INC: Inks Debt Waiver with Nord LB and West LB H U N G A R Y MAV ZRT: Bankruptcy Seen Early Next Year Absent Gov't Bailout * HUNGARY: Liquidation Procedures Up 37% in September 2009 I R E L A N D NEW BOND: S&P Downgrades Ratings on Class A Notes to 'D' I T A L Y IT HOLDING: Says Banks Still Evaluating Request for Credit Lines K A Z A K H S T A N KALIOPPA LLP: Creditors Must File Claims by October 21 KBE INVEST: Creditors Must File Claims by October 21 MAMANGER LTD: Creditors Must File Claims by October 21 MASHKUR LLP: Creditors Must File Claims by October 21 ORAL INTERIER: Creditors Must File Claims by October 21 K Y R G Y Z S T A N ENIKOM STROY: Creditors Must File Claims by October 28 LINE PROFI: Creditors Must File Claims by October 28 KYRGYZ STROY: Creditors Must File Claims by October 28 L U X E M B O U R G DEXIA FUNDING: Fitch Junks Ratings on Two Hybrid Securities DEXIA FUNDING: Nonpayment of Coupons Cue S&P's Junk Rating N E T H E R L A N D S AEGON NV: Raises US$650 Million for U.S. Operations LEO MESDAG: Fitch Cuts Ratings on Two Classes of Notes to 'B' LEVERAGED FINANCE: Moody's Junks Rating on EUR6MM Class R Notes MESDAG BV: Fitch Junks Rating on Class E Notes From 'BBB-' OCEANTEAM B.V.: Declared Bankrupt by Amsterdam Court R U S S I A ALP-SERVIS LLC: Creditors Must File Claims by October 25 ARDON-STROY LLC: Creditors Must File Claims by October 25 BANK SOYUZ: Moody's Withdraws 'E' Bank Financial Strength Rating MOSCOW BANK: Fitch Affirms Individual Rating at 'E' MOSCOW CAPITAL: Moody's Withdraws 'E' Bank Strength Rating GRAZHDAN-STROY CJSC: Creditors Must File Claims by October 25 KIT FINANCE: Moody's Withdraws 'Caa2' Currency Deposit Ratings KVARTAL LLC: Creditors Must File Claims by October 25 MOSCOW BANK: Fitch Affirms Individual Rating at 'D/E' NEVELSKIY MILK: Creditors Must File Claims by October 25 PENOVSKAYA FORESTRY: Court Names V.Shemigon as Insolvency Manager SEVER-GEO LLC: Creditors Must File Claims by October 25 TARSK LES: Creditors Must File Claims by November 25 VAVILON LLC: Astrakhanskaya Bankruptcy Hearing Set November 26 VOLGOGRADSKIY VEHICLE: S. Kagitin Named Insolvency Manager * RUSSIA: Moody's Sees Negative Rating Pressure on Banks S W I T Z E R L A N D DDL HORLOGERIE: Claims Filing Deadline is December 15 MUNOT TAXI: Claims Filing Deadline is December 22 U K R A I N E LEON-MOKOM LLC: Creditors Must File Claims by October 18 NAFTOKHIMIK PRYKARPATTYA: Facing Bankruptcy, Delo Says SAUS TOWN: Creditors Must File Claims by October 18 TRAY-LIDER LLC: Creditors Must File Claims by October 18 UKRIMPEKS-2000 LLC: Creditors Must File Claims by October 17 ZIZA LLC: Creditors Must File Claims by October 17 U N I T E D K I N G D O M COLT TELECOM: Moody's Lifts Corporate Family Rating to 'Ba3' ITV PLC: Launches GBP135 Million Bond Issue ITV PLC: Trading Update Relieves Pressure on Fitch's 'BB-' Rating LANDMARK MORTGAGES: Fitch Cuts Rating on Class D Notes to 'CC' LLOYDS BANKING: May Have to Pay "Break Fee" From Insurance Scheme MERCHANT INNS: In Administration; Deloitte on Board ROYAL BANK: Mulls Disposal of 312 Branches in England and Wales ROYAL BANK: Mass Resignation at RBS Coutts Singapore Branch TATA MOTORS: Raises US$750 Mln Through GDS, Convertible Notes Sale WHITE YOUNG: Defers Test Date for Financial Covenants * UK: PwC Says Pace of Corporate Failures Slowing * UK: Aim Delistings Slowing, Statistics Show X X X X X X X X * Upcoming Meetings, Conferences and Seminars ********* ============= A U S T R I A ============= ANDREAS BRAUN: Claims Filing Deadline is November 3 --------------------------------------------------- Creditors of Andreas Braun Metallfertigung GmbH have until November 3, 2009, to file their proofs of claim. A court hearing for examination of the claims has been scheduled for November 17, 2009 at 10:00 a.m. For further information, contact the company's administrator: Mag. Gerhard Rigler Hauptplatz 14 2700 Wiener Neustadt Austria Tel: 02622/84 141 Fax: 02622/84 141-24 E-mail: office@hain-rechtsanwaelte.at KOMMUNALKREDIT AUSTRIA: Moody's Cuts Bank Strength Rating to 'E' ---------------------------------------------------------------- Moody's Investors Service downgraded the bank financial strength rating of Kommunalkredit Austria AG to E from D. The long-term senior debt and deposit ratings were downgraded to Baa1 from Aa3 and the subordinated liabilities to Baa2 from A1. All these ratings carry a stable outlook. Kommunalkredit's short-term rating was downgraded to Prime-2 from Prime-1. At the same time, Moody's also downgraded Kommunalkredit's subsidiary, Kommunalkredit International Bank Ltd, and various hybrid instruments of Kommunalkredit, as detailed below. Moody's affirmed, with a stable outlook, Kommunalkredit's Aaa ratings for debt guaranteed by the Republic of Austria. The rating actions conclude the review of Kommunalkredit and KIB initiated in February 2009. "The downgrade of Kommunalkredit's ratings reflects the bank's lack of financial flexibility, as expressed by its negative equity under IFRS principles. However, the weakness of its standalone credit quality is mitigated by Moody's expectation of ongoing support from the Austrian government, which is now the bank's owner following nationalization last year. The Baa1 ratings include a very high probability of systemic support, but also incorporate a degree of longer-term uncertainty about the bank's strategy and viability," said Dominique Nutolo, Assistant Vice President and lead analyst for Austrian banks at Moody's. Downgrade of BFSR Due to Negative Equity and Lack of Capital Generation Capacity Kommunalkredit's downgraded E BFSR translates to a Baseline Credit Assessment (BCA) of Caa2 and reflects Moody's assessment of the bank's overall very strained financial profile. The bank was nationalised by the Republic of Austria (now a 99.78% shareholder) after a liquidity squeeze in November 2008. Mostly due to the valuation losses of EUR2.6 billion on its excessive CDS portfolio -- the group has sold protection of a nominal amount of EUR13.5 billion compared with total assets of EUR37.5 billion at the end of 2008 -- Kommunalkredit group reported a consolidated pre-tax loss of EUR1.5 billion for the 2008 financial year and negative equity of EUR1.2 billion under IFRS. Despite the bank reporting a pre-tax profit of EUR225 million in H1 2009, its equity still remains at a negative EUR490 million under IFRS accounting principles. The H1 result was driven by the positive valuation result of the CDS portfolio of EUR343.4 million. Despite its negative equity at a group level, Moody's notes that Kommunalkredit is still classified as a going concern by the Austrian regulator with a Tier 1 ratio of 8.3% at the end of June 2009 under local GAAP. Under local accounting rules, the bank's financial performance has been unaffected by fair value fluctuations as CDS are treated like guarantees. Consequently, the bank reported positive EUR604 million equity on a standalone basis at the end of June. However, Moody's ratings are based on the group's financials under IFRS. They are designed to show the financial performance of an economic entity and are therefore in the focus of the financial market participants, while the standalone financial statements focus on the legal entity. Therefore, Kommunalkredit's negative equity under IFRS is a sign of its severe financial distress. Moody's also remains concerned about the group's business franchise as a public lender. Its business model of short-term funding and low-margin long-term lending to the public sector has been exposed during the crisis as unsustainable and does not supply a sufficient margin with which to buffer the high volatility of Kommunalkredit's CDS portfolio. In addition, the business faces higher capital requirements, while the margins will most likely be too low to generate sufficient returns on such higher capital levels. Moody's notes that Kommunalkredit's funding flexibility is very constrained. The bank previously relied on a high proportion of medium- and short-term debt for the funding of its long-term assets. It now fully depends on the support of the Austrian government for its refinancing. According to Moody's, it may take the group an extended time to become profitable again. The low margins in its core business leave only a small buffer against the increased funding costs and the incremental costs for guarantees and capital provided by the Republic of Austria. As a consequence, Moody's believes that it will take at least several years for Kommunalkredit to be able to again tap the capital markets as a standalone, unsupported entity. Market access will likely remain limited until the group has been restructured and shows sustainable profits from its core business. Overall, Moody's believes that the E BFSR now adequately reflects Kommunalkredit's profile given its negative equity and its impaired franchise as a public lender with a low margin business and -- in relative terms -- an oversized CDS portfolio. As a consequence, Kommunalkredit is currently dependent on outside systemic support to continue as a going concern. Moody's notes that Kommunalkredit in June 2009 provided a restructuring plan to the European Commission, whose review has not yet been finalised. The plan proposes that the bank will be divided into a 'going concern' bank and an entity to be wound down. Moody's understands that, despite the bank's planned break- up, the future entities will both be liable for all legacy obligations. Therefore, it believes that the restructuring will have no impact on the financial strength of the 'going concern' bank or the entity to be wound down. According to the restructuring plan, the 'going concern' bank will focus on municipal and infrastructure-related project business going forward. The rating agency will reassess the bank's credit profile once the restructuring plan has been agreed with the European Commission. The stable outlook on the E BFSR reflects Moody's view that, in the short-to-medium term, there is very limited upward pressure on the rating. Any upgrade would depend on the group being adequately recapitalised and returning to profitability, and its franchise recovering on a sustained basis, among other factors. Senior Debt Ratings Receive Large Uplift Due to Very High Probability of Systemic Support Kommunalkredit's Baa1 long-term debt and deposit ratings benefit from Moody's assessment of a very high probability of systemic support (demonstrated by the rescue and takeover of the bank by the Republic of Austria in the course of the financial crisis) and therefore receive a multi-notch uplift from the BCA. Despite the bank's nationalization and the support from the Aaa- rated Austrian government, the Baa1 ratings reflect the bank's impaired franchise and longer-term uncertainty about its future as a standalone viable entity. The stable outlook on the senior debt ratings reflects Moody's view that, in the short term, there is only very limited up or downside potential for the ratings. Moody's believes that the Republic of Austria will be able to sell the bank only in the medium-to-long term, which could then exert adverse pressure on the ratings as the rating agency would reassess the probability of systemic support. Positive pressure on the ratings could be exerted by either a multi-notch upgrade of the BFSR or by the Republic of Austria's explicit guarantee of all outstanding debt. Moody's believes that both scenarios are very unlikely at the moment. Downgrade of Hybrid Instruments Reflects Increased Risk of Coupon Losses Moody's notes that coupon losses for Kommunalkredit's hybrid securities have become very likely since the company announced that it expects a net loss for the 2009 financial year on its standalone financial statements under local GAAP and therefore does not expect to pay coupons on its hybrid instruments in 2010 for the 2009 financial year. i) Moody's downgraded Kommunalkredit's participation capital notes (ISINs: XS0252707624, XS0285503248) to Ca from Caa1. The downgrade reflects the rating agency's expectation of a high likelihood that coupons will not be paid for 2009 and 2010 and 2011 due to a breach of the distributable profit trigger and a high likelihood of a principal write-down, as announced by the bank. The instruments are non-cumulative. ii) The Capital Notes issued by Kommunalkredit Capital I Limited (ISINs: DE000A0DHT43) were downgraded to Ca from Caa1 as a result of the high likelihood of three coupon losses for 2009 and 2010 and 2011. The instruments have a distributable profit trigger and are non-cumulative. Moody's believes that Kommunalkredit's reserves are not sufficient to compensate for losses in coming years. iii) Moody's downgraded Kommunalkredit's JPY5 billion Schuldscheindarlehen, due 2034 and the bank's Subordinated notes (ISINs: XS0270579856, XS0284217709) to Ca from B1. The downgrade reflects the rating agency's expectation of a high likelihood that coupons will not be paid for 2009 and 2010 and 2011 due to a breach of the net loss trigger. Due to the net loss principal write-down trigger and the bank's announcement that it expects to report a loss in 2009, there is an increased likelihood of a principal write-down. The instruments are cumulative and have a long maturity (2019, 2021 and 2034). However, due to Kommunalkredit's current financial performance, it is uncertain whether deferred coupons will be paid out in the future. The outlook on all the hybrid instruments is stable. Downgrade Of Kib's BFSR And Long-Term Ratings Moody's downgraded KIB's BFSR to E (BCA of Caa2) from D, its long- term ratings to Baa2 from A1 and its short-term rating to Prime-2 from Prime-1. KIB's ratings are fully aligned with the ratings of its parent Kommunalkredit, reflecting that the 100% subsidiary is an integral part of Kommunalkredit. KIB has stopped initiating new business and is now in the process of winding down its operations. The bank will most likely be absorbed by its parent in the course of the group's restructuring. The one-notch difference between the long-term ratings of the parent (Baa1) and the ratings of KIB (Baa2) reflect the lower probability of systemic support for a foreign subsidiary. Rating History Moody's previous rating action on Kommunalkredit was implemented on February 17, 2009, when the rating agency downgraded the bank's BFSR to D from C- and kept all the ratings, including the Aa3 senior debt and deposit ratings, on review for further downgrade. Headquartered in Vienna, Kommunalkredit Austria reported consolidated assets of EUR33.5 billion at the end of June 2009 and an after-tax profit of EUR224.6 million in H1. =============== B U L G A R I A =============== * BULGARIA: Corporate Bankruptcies Up 141% in September 2009 ------------------------------------------------------------ The number of Bulgarian companies going bankrupt increased by 141% in September 2009 as a result of the global economic crisis, Novinite.com reports. Citing statistical data of credit solution provider Coface Bulgaria, Novinite.com says a total of 239 bankruptcy filing procedures have been initiated in Bulgaria since the beginning of 2009, compared to 99 procedures for the same period in 2008. According to Novinite.com, the most bankruptcies have been registered in agriculture and city economy. =========== F R A N C E =========== BELVEDERE SA: Court Defers Decision on Rescue Plan Until Nov. 10 ---------------------------------------------------------------- Ladka Bauerova at Bloomberg News reports that Belvedere SA's creditors said the commercial court in Dijon postponed a ruling on the company's rescue plan until Nov. 10, demanded that the company publishes earnings, and recommended asset sales. Bloomberg relates that the creditors, represented by Paris-based HeadLand Consultancy, said in an e-mailed statement Tuesday the company was told by the court to "considerably improve its rescue plan". According to Bloomberg, Belvedere Chairman and Chief Executive Officer Jacques Rouvroy said in a telephone interview Tuesday the company, which was granted court protection from creditors last year, will publish its delayed earnings for the first half of this year on or after Oct. 30. Mr. Rouvroy disputed the creditors' claim that the court recommended selling some of the company's operations in Poland and France, Bloomberg notes. Belvedere SA -- http://www.belvedere.fr/-- is a France-based company engaged in the production and distribution of beverages. The Company�s range of products includes vodka and spirits, wines, and other beverages, under such brands as Sobieski, William Peel, Marie Brizard, Danzka and others. Belvedere SA operates through its subsidiaries, including Belvedere Czeska, Belvedere Scandinavia, Belvedere Baltic, Belvedere Capital Management, Sobieski SARL and Sobieski USA, among others. It is present in a number of countries, such as Poland, Lithuania, Bulgaria, Denmark, France, Spain, Russia, Ukraine, the United States and others. In addition, the Company holds a minority stake in Abbaye de Talloires, involved in the hotel and wellness centre activities. ============= G E R M A N Y ============= ARCANDOR AG: Metro May Drop Plan to Buy Karstadt Stores ------------------------------------------------------- Holger Elfes and Mike Gavin at Bloomberg News report that Metro AG may scrap a plan to buy Karstadt department stores from rival Arcandor AG. Bloomberg relates Handelsblatt, citing Metro deputy chief executive officer Thomas Unger, reported Tuesday the company will instead aim to sell its own Kaufhof department store unit, because it doesn't fit into its strategy of international expansion. Bloomberg recalls Metro has said it is interested in buying about 60 of the more than 120 existing Karstadt stores to combine them with Kaufhof. About Arcandor AG Germany-based Arcandor AG (FRA:ARO) -- http://www.arcandor.com/-- formerly KarstadtQuelle AG, is a tourism and retail group. Its three core business areas are tourism, mail order services and department store retail. The Company's business areas are covered by its three operating segments: Thomas Cook, Primondo and Karstadt. Thomas Cook Group plc is a tour operator with operations in Europe and North America, set up as a result of a merger between MyTravel and Thomas Cook AG. It also operates the e-commerce platform, Thomas Cook, supporting travel services. Primondo has a portfolio of European universal and specialty mail order companies, including the core brand Quelle. Karstadt operates a range of department stores, such as cosmopolitan stores, including KaDeWe (Kaufhaus des Westens), Karstadt Oberpollinger and Alsterhaus; Karstadt brand department stores; Karstadt sports department stores, offering sports goods in a variety of retail outlets, and a portal, karstadt.de that offers online shopping, among others. On Sept. 2, 2009, the Troubled Company Reporter-Europe, citing Bloomberg News, reported that a local court in Essen formally opened insolvency proceedings for the Arcandor on Sept. 1. Bloomberg disclosed the proceedings started for the Arcandor holding company and for 14 units, including the Karstadt department-store chain and Primondo mail-order division. As reported in the Troubled Company Reporter-Europe, on June 9, 2009, Arcandor filed for bankruptcy protection after the German government turned down its request for loan guarantees. On June 8, 2009, the government rejected two applications for help by the company, which employs 43,000 people. The retailer sought loan guarantees of EUR650 million (US$904 million) from Germany's Economy Fund program. It also sought a further EUR437 million from a state-owned bank. ARCANDOR AG: Sal. Oppenheim to Further Reduce Stake --------------------------------------------------- Sal. Oppenheim plans to unload all of its investment in Arcandor AG within the next few weeks, Eva Kuehnen and Alexander Huebner at Reuters report, citing a source close to the matter. Reuters relates Arcandor said earlier on Tuesday cut its stake in Arcandor to 9.69% from 24.9% as of Oct. 9. According to Reuters, the financial source said the shares had been sold in the market in small tranches. Reuters notes the source added it could be expected that Sal. Oppenheim would reduce its stake further toward zero in the near term and before the end of the year. About Arcandor AG Germany-based Arcandor AG (FRA:ARO) -- http://www.arcandor.com/-- formerly KarstadtQuelle AG, is a tourism and retail group. Its three core business areas are tourism, mail order services and department store retail. The Company's business areas are covered by its three operating segments: Thomas Cook, Primondo and Karstadt. Thomas Cook Group plc is a tour operator with operations in Europe and North America, set up as a result of a merger between MyTravel and Thomas Cook AG. It also operates the e-commerce platform, Thomas Cook, supporting travel services. Primondo has a portfolio of European universal and specialty mail order companies, including the core brand Quelle. Karstadt operates a range of department stores, such as cosmopolitan stores, including KaDeWe (Kaufhaus des Westens), Karstadt Oberpollinger and Alsterhaus; Karstadt brand department stores; Karstadt sports department stores, offering sports goods in a variety of retail outlets, and a portal, karstadt.de that offers online shopping, among others. On Sept. 2, 2009, the Troubled Company Reporter-Europe, citing Bloomberg News, reported that a local court in Essen formally opened insolvency proceedings for the Arcandor on Sept. 1. Bloomberg disclosed the proceedings started for the Arcandor holding company and for 14 units, including the Karstadt department-store chain and Primondo mail-order division. As reported in the Troubled Company Reporter-Europe, on June 9, 2009, Arcandor filed for bankruptcy protection after the German government turned down its request for loan guarantees. On June 8, 2009, the government rejected two applications for help by the company, which employs 43,000 people. The retailer sought loan guarantees of EUR650 million (US$904 million) from Germany's Economy Fund program. It also sought a further EUR437 million from a state-owned bank. DEUTSCHE HYPOTHEKENBANK: Fitch Affirms Junk Ratings on Three Notes ------------------------------------------------------------------ Fitch Ratings has affirmed the notes issued by Deutsche Hypothekenbank (Actiengesellschaft), Hannover 1999-1 and taken other rating actions: -- EUR3.5 million class Ma (DE0002537867) affirmed at 'A'; Outlook Stable -- EUR1.1 million class Mb (DE0002537875) affirmed at 'A'; Outlook Stable -- EUR9.7 million class B-1A (DE0002537883) affirmed at 'BB'; Outlook revised to Stable from Negative -- EUR9 million class B-1B affirmed at 'BB'; Outlook revised to Stable from Negative -- EUR5 million class B-2aA (DE0002537891) affirmed at 'CCC'; Recovery Rating revised to RR4 from RR3 -- EUR2 million class B-2aB affirmed at 'CCC; RR revised to RR4 from RR3 -- EUR5 million class B-2b (DE0002537909) affirmed at 'CCC'; RR revised to RR5 from RR3 The transaction is performing in line with current expectations following its downgrade in May 2007. The securitized portfolio comprises the second lien or upper loan to value portions of 123 commercial mortgage loans, predominantly backed by retail, office and residential properties located across Germany. In August 2009, the securitized loan balance totalled EUR38.5 million, equating to 14% of the original portfolio balance. A total 22.6% (by balance) of the current portfolio, or EUR8.7 million, is currently in arrears (EUR0.2 million), restructuring agreements (EUR7.4 million) or foreclosure (EUR1.1 million). A non-rated first loss piece continues to absorb losses and currently stands at EUR3.2 million (or 34% of its original balance). The weighted average loan-to-value ratio of the portfolio increased to 139% in August 2009 from 82% at closing in November 1999. The decline is predominantly the result of the deterioration in the underlying property markets. Losses of EUR6.1 million have been incurred to date, with a loss severity of 100% on the securitized portion, since all recoveries (usually derived from auction sales) have been insufficient to fully redeem the senior-ranking, but not securitized first lien portions of the affected loans. In its analysis, Fitch assumed that for the majority of EUR8.7 million delinquent/defaulted/restructured loans, eventual losses will be incurred as a result of involuntary asset sales, with the historical loss severity of 100% for the securitized portion. Similarly it is assumed that a lesser percentage of the EUR29.8 million current loans will default over time and further increase the losses in the transaction. This method of calculating the "likelihood of a loss occurrence" for different stress scenarios is not a reflection of Fitch's current commercial mortgage backed securities surveillance criteria, but has instead been specifically developed for the DHH transaction to address its unique features, including its synthetic nature and the collateral type (second lien). The issuer has the right to redeem all outstanding notes if less than 10% of the original portfolio remains outstanding. GENERAL MOTORS: German Workers at Opel Unit Agree to Wage Freeze ---------------------------------------------------------------- Andreas Cremer and Chris Reiter at Bloomberg News report that German workers at General Motors Co.'s Opel unit agreed to freeze wages and cut bonuses. Bloomberg relates Harald Lieske, works council chief at the plant in Eisenach, said in a phone interview yesterday at the plant in Eisenach, the labor accord, which is contingent upon Opel employees getting a 10% stake in the company, will help achieve annual savings of about EUR175 million (US$261 million) at the carmaker's four German factories, Bloomberg says the concessions are part of Magna International Inc.'s terms for buying Ruesselsheim, Germany-based Opel and its Vauxhall brand in Britain. Bloomberg recalls Magna, Canada's largest auto-parts maker, and partner OAO Sberbank, Russia's biggest lender, agreed to invest EUR500 million in Opel in return for a combined 55% stake. According to Bloomberg, Mr. Lieske said Opel workers in Germany will forego increases in regular pay through 2011, and they accepted a 50% cut in vacation pay and a 75% reduction in Christmas bonuses in 2010 and 2011. Mr. Lieske, as cited by Bloomberg, said Magna also won't contribute to Opel pension programs for the next two years. About General Motors Headquartered in Detroit, Michigan, General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- as founded in 1908. GM employs about 266,000 people around the world and manufactures cars and trucks in 35 countries. In 2007, nearly 9.37 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. GM Europe is based in Zurich, Switzerland, while General Motors Latin America, Africa and Middle East is headquartered in Miramar, Florida. As reported by the Troubled Company Reporter, GM reported net loss of US$6.0 billion, including special items, in the first quarter of 2009. This compares with a reported net loss of US$3.3 billion in the year-ago quarter. As of March 31, 2009, GM had US$82.2 billion in total assets and US$172.8 billion in total liabilities, resulting in US$90.5 billion in stockholders' deficit. General Motors Corporation and three of its affiliates filed for Chapter 11 protection on June 1, 2009 (Bankr. S.D.N.Y. Lead Case No. 09-50026). General Motors changed its name to Motors Liquidation Co. following the sale of its key assets to a company 60.8% owned by the U.S. Government. The Honorable Robert E. Gerber presides over the Chapter 11 cases. Harvey R. Miller, Esq., Stephen Karotkin, Esq., and Joseph H. Smolinsky, Esq., at Weil, Gotshal & Manges LLP, assist the Debtors in their restructuring efforts. Al Koch at AP Services, LLC, an affiliate of AlixPartners, LLP, serves as the Chief Executive Officer for Motors Liquidation Company. GM is also represented by Jenner & Block LLP and Honigman Miller Schwartz and Cohn LLP as counsel. Cravath, Swaine, & Moore LLP is providing legal advice to the GM Board of Directors. GM's financial advisors are Morgan Stanley, Evercore Partners and the Blackstone Group LLP. Bankruptcy Creditors' Service, Inc., publishes General Motors Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by General Motors Corp. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). QUOKKA FINANCE: Moody's Cuts Rating on Class E Notes to 'B1' ------------------------------------------------------------ Moody's Investors Service said that it has downgraded these classes of notes issued by Quokka Finance p.l.c.: -- EUR400M Class A Secured Floating Rate Notes due 2016, Downgraded to Aa1; previously on August 16, 2006 Definitive Rating Assigned Aaa -- EUR78.9M Class B Secured Floating Rate Notes due 2016, Downgraded to A1; previously on April 8, 2009 Aaa Placed Under Review for Possible Downgrade -- EUR40.1M Class C Secured Floating Rate Notes due 2016, Downgraded to Baa1; previously on April 8, 2009 Aa1 Placed Under Review for Possible Downgrade -- EUR58.5M Class D Secured Floating Rate Notes due 2016, Downgraded to Ba1; previously on April 8, 2009 Aa3 Placed Under Review for Possible Downgrade -- EUR40M Class E Secured Floating Rate Notes due 2016, Downgraded to B1; previously on April 8, 2009 Baa2 Placed Under Review for Possible Downgrade The rating actions conclude the review for possible downgrade, which Moody's initiated on April 8, 2009. The rating actions take Moody's updated central scenarios into account, as described in Moody's Special Report "Moody's Updated on Its Surveillance Approach for EMEA CMBS". 1) Transaction Overview Quokka Finance p.l.c closed in August 2006 and involved the refinancing of the borrower group's liabilities that mainly originated from the acquisition of several housing companies and property portfolios located in Germany. In total, the borrower group, consisting of 11 borrowers, acquired 18,979 residential units, 4,723 parking lots and garages and 554 small commercial properties. The property portfolio is diversified throughout Germany with concentrations in Lower Saxony, North-Rhine- Westphalia, Berlin and Schleswig-Holstein. At closing, all 11 loans provided to the borrowers were cross- collateralized through a guarantee structure. If any of the borrowers suffers a cash shortfall, a cross- guarantee provides that any other borrower has to make the cash shortfall whole. Initially, all 11 borrowers were owned by a joint venture of Babcock & Brown and GPT Group (the "Original Sponsors"). In Q1 and Q2 2007, the Original Sponsors sold the majority shares in two of the borrowers to Colonia Real Estate (the "New Sponsor"). As a result of the change of sponsor, the loans of the two disposed borrowers are no longer cross-collateralized with the remaining portfolio. 2) Rating Rationale The rating actions were prompted by (i) the property value decline that Moody's anticipates for large multi-family portfolios since the peak of the market in 2007; (ii) the lower than initially expected cash flows generated by the property portfolio, influencing negatively Moody's value assessment; (iii) the substantially increased refinancing risk for the loans given the transaction's size, leverage and the maturity of all loans in 2013; and (iv) the increased disparity in credit quality of the loans combined with the pro-rata allocation of loan prepayments. In Moody's view, the default risk of the securitized loans has increased substantially compared to closing. Coupled with the negative impact of a significantly reduced portfolio value, Moody's expects a moderate amount of losses on the securitized portfolio. Given the back-loaded default risk profile and the anticipated work-out strategy for defaulted loans, these expected losses will only crystallize towards the end of the transaction term. The available subordination protects the more senior notes against those losses. However, the variability around the expected loss has also increased, resulting in the downgrades. Since closing, only 5.1% of the initial loan portfolio has prepaid as a result of scheduled amortization and guarantee release premia paid in conjunction with the disposal of shares in two of the borrowers to the New Sponsor. As a result, the senior classes have not benefited from a meaningful increase in subordination levels since closing. On an aggregated portfolio basis, the current Moody's note-to- value (NTV) of 52.1% for the Class A notes, 63.2% for the Class B notes, 68.8% for the Class C notes, 77.1% for the Class D notes and 82.7% for the Class E notes provides some property value cushion, but this cushion has already been eroded since closing and Moody's expects further erosion until 2011. The current Moody's loan-to-value (LTV) levels range from 73.5% (for the Domus Loan) to 92.6% (for the Emersion Loan), which increases the rating sensitivity of the more senior notes in the transaction to loan prepayments. Moody's notes that the highest rating variability is for the Class A and Class B notes. For scenarios where the stronger loans prepay before loan maturity, the NTV levels for senior notes are expected to increase in tandem with the NTV levels of junior notes since loan prepayments will be applied effectively pro rata to all classes of notes. In these scenarios, the subordination available to more senior notes does not increase in order to mitigate the negative effect of the increased expected loss of the then remaining loan portfolio. 3) Transaction Performance History Coverage and Cash Flows. Since closing, the weighted-average debt service cover ratio (WA DSCR) has been continuously higher than anticipated at closing. However, a significant portion of the cash flow available for debt service as defined in the loan agreement comprises amounts standing to the credit of the borrowers accounts at the previous interest payment date. While the coverage under the loans currently benefits from this additional cash in the structure, the borrowers have no contractual obligation to retain the cash within the transaction subject to the DSCR covenant of 1.05x. Excluding cash on the borrowers accounts, the net cash flows generated by the underlying portfolio continue to be lower than Moody's anticipated at closing. Vacancy Rates. The vacancy rate in the property portfolio had increased to 15.1% as of June 2009 from 12.7% at closing. Vacancy rates range significantly between the sub-portfolios from 0% in the Annenhoefe Loan portfolio to 22% in the Emersion Loan portfolio. Values. The underwriter's (UW) value of the portfolio was EUR802.5 million at closing of the transaction. The portfolio was revalued in May 2008 at EUR912.2 million (+13.7%). Property Sales. At closing, the sponsor's business plan targeted property disposals and income increases through vacancy rate reductions. The Original Sponsors have not disposed of any assets to date in form of property or unit by unit sales. However, due to the sale of shares in two of the borrowers, the Original Sponsors economically sold 39.3% of the initial portfolio by property value. In 2007, 99.6% of the shares in the Emersion Borrower and the Domus Borrower were disposed and guarantee release premia of EUR7.6 million were paid to release the respective borrowers from their obligation to guarantee the liabilities of the other nine borrowers. Neither loan was prepaid following the share sale as the provisions for an asset control transfer event that would result in a mandatory prepayment of the loans were not met. Accordingly, the transaction currently consists of 11 loans granted to 11 borrowers, of which nine are cross-collateralized and ultimately owned by the Original Sponsors and two loans that are not cross-collateralized with any other loan in the transaction and the respective borrowers are ultimately owned by the New Sponsor. As a result of scheduled amortization and payment of guarantee release premia, the aggregated loan balance has reduced by approximately EUR33.85 million since closing. Taking into account the latest valuation performed in May 2008, the total weighted average LTV (WA LTV) of the borrowers was 64.2% as of June 2009, compared to 77% at closing. The reported LTV is based on the portfolio value as of closing and was 73% as of June 2009. Within the transaction, scheduled amortization is applied sequentially to the notes while prepayments are allocated on a pro-rata basis to the loans and the notes as long as the WA LTV of the pool is below 75%. Accordingly, any loan prepayments would not have a positive impact on transaction leverage but would decrease the diversification of the underlying portfolio. Overall, the transaction continues to perform below Moody's initial expectations due to increasing vacancy in some of the sub- portfolios and the lower than initially expected deleveraging of the transaction, which combined with property value decline results in a higher than originally expected refinancing risk in 2013. 4) Moody's Portfolio Analysis Property Portfolio Cash Flows. The rental income, which is derived solely from the rent collections within the property portfolio, has consistently decreased since closing, mainly driven by the increasing vacancy rate in the property portfolio. Moody's notes that cash available on the borrowers accounts comprises a significant portion of cash flows available for debt service. Overall, rental income is expected to continue under-performing Moody's initial assumptions in the future. Property Values. The number of transactions involving larger multi-family portfolios in Germany has decreased significantly since the peak of the market in 2006 and 2007. Moody's assumes that since closing, the aggregate value of the portfolio has decreased by 12.1% to EUR705.6 million and may drop further to a trough value of EUR670.4 million in 2010/2011. Moody's applied values reflect both the reduced interest in acquiring larger multi-family portfolios in Germany and the restricted availability of financing for portfolios of this size. In deriving these value assessments, Moody's took into account a lower than reported annual net cash flow of EUR38.2 million mainly due to higher assumptions regarding ongoing capex and maintenance requirements and excluding the amounts currently on the borrowers accounts. Moody's took these property values into account when assessing the default risk at maturity and the loss given default of the securitized loans. Based on Moody's value assumptions, the transaction's current total LTV is around 83%, increasing to 86% based on trough values. Default Risk and Refinancing Risk. Compared to Moody's closing analysis, the term default risk of the loans has increased given the lower than expected cash flows generated by the property portfolio as well as the absence of property sales. Overall, in Moody's view, the main default risk of the loans is still the refinancing risk with the respective default probability varying between the securitized loans. Given the increased Moody's LTVs of the loans and the relatively high total debt balance to be refinanced in 2013, the default risk of the loans at maturity has in Moody's opinion increased substantially. Structural Aspects. Moody's believes that additionally to the refinancing risk another main weakness of the transaction is the allocation of the prepayment proceeds. Adverse selection might occur through the prepayment of better (lower levered) loans and pro-rata allocation of the proceeds, while the transaction remains exposed to the weaker performing loans and borrowers without building up incremental subordination for more senior notes. In some scenarios, this could potentially be accompanied by loss of the cross-collateralization advantage. Increased Loss Exposure. Taking into account the increased default risk of the loans, Moody's decreased property values and the expected future value development, Moody's anticipates a moderate amount of losses on the loan portfolio. The available subordination protects the more senior notes against those losses, but the variability around the expected loss has increased as well, resulting in the downgrades. In contrast, the Class E Notes do not benefit from any credit subordination and would be hit by any loss occurring in the portfolio. =========== G R E E C E =========== DRYSHIPS INC: Inks Debt Waiver with Nord LB and West LB ------------------------------------------------------- DryShips Inc. on October 13 said that it has signed agreements with Nord LB and West LB on waiver terms for $116 million and $67 million respectively of our outstanding debt. George Economou, Chairman and Chief Executive Officer, commented: "I am pleased to report another set of waivers from our banks who remain extremely supportive of DryShips. We are now left with $187.5 million of outstanding debt, where constructive discussions with the banks continue for waivers and we expect to have those concluded shortly." About DryShips Inc. DryShips Inc. -- http://www.dryships.com/-- based in Athens, Greece, is an owner and operator of drybulk carriers and offshore oil deep water drilling that operate worldwide. DryShips owns a fleet of 41 drybulk carriers comprising 7 Capesize, 30 Panamax, 2 Supramax and 2 newbuilding Drybulk vessels with a combined deadweight tonnage of over 3.7 million tons, 2 ultra deep water semisubmersible drilling rigs and 4 ultra deep water newbuilding drillships. DryShips Inc.'s common stock is listed on the NASDAQ Global Market where trades under the symbol "DRYS". ============= H U N G A R Y ============= MAV ZRT: Bankruptcy Seen Early Next Year Absent Gov't Bailout ------------------------------------------------------------- Edith Balazs at Bloomberg News, citing Magyar Hirlap, reports that MAV Zrt., Hungary's state railway, may go bankrupt at the beginning of next year unless the government provides additional financing to the heavily indebted company. According to Bloomberg, the newspaper said state support for MAV will be lowered by HUF40 billion (US$222 million) in 2010 under next year's budget draft, forcing the rail company to get loans to secure the financing of its operations. Headquartered in Budapest, Hungary, MAV Zrt. is 100% government- owned and the country's vertically integrated incumbent national railway operator. In FY2008, MAV reported revenues of HUF179 billion (around EUR650-670 million) and received HUF191 billion in reimbursements for costs from the government. * * * As reported in the Troubled Company Reporter-Europe on July 3, 2009, Moody's Investors Service downgraded to Ba1 from Baa2 the Corporate Family Rating of MAV Zrt Hungarian State Railways. Moody's said the outlook for the rating is negative. * HUNGARY: Liquidation Procedures Up 37% in September 2009 ---------------------------------------------------------- MTI-ECONEWS, citing company information services provider Opten, reports that the number of liquidation procedures initiated against Hungarian companies rose 37% to 1,400 in September 2009 from the same month a year earlier. The number in January-September was up 34% from the same period a year earlier, the report discloses. According to the report, 58 companies filed for bankruptcy protection in the January to September period, still more than the usual 10 to 15 a year. ============= I R E L A N D ============= NEW BOND: S&P Downgrades Ratings on Class A Notes to 'D' -------------------------------------------------------- Standard & Poor's Ratings Services lowered to 'D' from 'CCC-' its credit rating on the class A notes issued by New Bond Street CDO 2 PLC. This downgrade follows S&P's receipt of an event of default notice from the trustee. The notice stated that on the most recent interest payment date, and on the subsequent five business days, the issuer did not have sufficient funds to pay interest amounts due on the class A notes. As S&P's rating on the class A notes addresses payment of timely interest and ultimate principal on the notes, S&P lowered its rating to 'D'. ========= I T A L Y ========= IT HOLDING: Says Banks Still Evaluating Request for Credit Lines ---------------------------------------------------------------- Marco Bertacche and Armorel Kenna at Bloomberg News report that IT Holding SpA said that banks are still evaluating its request for new credit lines. As reported in the Troubled Company Reporter-Europe, Bloomberg said IT Holding was granted bankruptcy protection in February along with all of its units after failing to make payments to lenders and suppliers. About IT Holding SpA Based in Milan, Italy, IT Holding SpA (BIT:ITH) -- http://www.itholding.com/-- operates in the luxury goods market. The company and its subsidiaries design, produce and distribute apparel, accessories, eyewear and perfumes. Its brand portfolio embraces: owned brands, Gianfranco Ferre, Malo, Exte, as well as licensed brands, Versace Jeans Couture, Versace Sport, Just Cavalli, C'N'C Costume National and Galliano. The company's production facilities are located in Italy. IT Holding SpA has a worldwide distribution network, including 39 directly operated stores, 274 monobrand stores and over 6,000 department and specialty stores. In order to be present in the most significant markets, IT Holding SpA has dedicated market companies: ITTIERRE SpA, ITTIERRE France SA, ITTIERRE Moden GmbH, IT USA HOLDING Inc and IT Asia Pacific Limited, among others. =================== K A Z A K H S T A N =================== KALIOPPA LLP: Creditors Must File Claims by October 21 ------------------------------------------------------ Creditors of LLP Kalioppa have until October 21, 2009, to submit proofs of claim to: Chapaev Str. 2 Podstepnoye Terektinsky District West Kazakhstan Kazakhstan Tel: 8 (7113) 23-64-72 The Specialized Inter-Regional Economic Court of West Kazakhstan commenced bankruptcy proceedings against the company on June 2, 2009, after finding it insolvent. The Court is located at: The Specialized Inter-Regional Economic Court of West Kazakhstan Seifullin Str. 37 Uralsk Kazakhstan KBE INVEST: Creditors Must File Claims by October 21 ---------------------------------------------------- LLP Kbe Invest Project is currently undergoing liquidation. Creditors have until October 21, 2009, to submit proofs of claim to: Dostyk Ave. 87v Almaty Kazakhstan MAMANGER LTD: Creditors Must File Claims by October 21 ------------------------------------------------------ Creditors of LLP Mamanger Ltd have until October 21, 2009, to submit proofs of claim to: Ilyaev Str. 24 Shymkent South Kazakhstan Kazakhstan The Specialized Inter-Regional Economic Court of South Kazakhstan commenced bankruptcy proceedings against the company on July 8, 2009, after finding it insolvent. The Court is located at: The Specialized Inter-Regional Economic Court of South Kazakhstan Tynybaev Str. 42 Shymkent Kazakhstan MASHKUR LLP: Creditors Must File Claims by October 21 ----------------------------------------------------- Creditors of LLP Mashkur have until October 21, 2009, to submit proofs of claim to: Micro District Taugul 1, 89-22 Almaty Kazakhstan The Specialized Inter-Regional Economic Court of Almaty commenced bankruptcy proceedings against the company on July 20, 2009, after finding it insolvent. The Court is located at: The Specialized Inter-Regional Economic Court of Almaty Baizakov Str. 273b Almaty Kazakhstan ORAL INTERIER: Creditors Must File Claims by October 21 ------------------------------------------------------- Creditors of LLP Oral Interier have until October 21, 2009, to submit proofs of claim to: Chapaev Str. 2 Podstepnoye Terektinsky District West Kazakhstan Kazakhstan The Specialized Inter-Regional Economic Court of West Kazakhstan commenced bankruptcy proceedings against the company on July 2, 2009, after finding it insolvent. The Court is located at: The Specialized Inter-Regional Economic Court of West Kazakhstan Seifullin Str. 37 Uralsk Kazakhstan Tel: 8 (7113) 23-64-72 =================== K Y R G Y Z S T A N =================== ENIKOM STROY: Creditors Must File Claims by October 28 ------------------------------------------------------ LLC Enikom Stroy Service is currently undergoing liquidation. Creditors have until October 28, 2009, to submit proofs of claim to: Isakeyev Str. 1a Bishkek Kyrgyzstan Tel: (+996 312) 69-02-61 LINE PROFI: Creditors Must File Claims by October 28 ---------------------------------------------------- LLC Line Profi is currently undergoing liquidation. Creditors have until October 28, 2009, to submit proofs of claim to: Togolok Moldo Str. 21 Bishkek Kyrgyzstan Tel: (+996 312) 59-46-89 KYRGYZ STROY: Creditors Must File Claims by October 28 ------------------------------------------------------ LLC Kyrgyz Stroy Keramika Ltd. is currently undergoing liquidation. Creditors have until October 28, 2009, to submit proofs of claim to: Toktogul Str. 230 Bishkek Kyrgyzstan Tel: (+996 312) 38-95-01 =================== L U X E M B O U R G =================== DEXIA FUNDING: Fitch Junks Ratings on Two Hybrid Securities ----------------------------------------------------------- Fitch Ratings has downgraded two of Dexia's ('A+'/'F1+'/Outlook Stable) hybrid securities to 'CCC' from 'B' and maintained them on Rating Watch Negative. The rating action follows the bank's October 9, 2009 announcement that it will waive the next coupon payment on one of its hybrid securities. The agency has simultaneously maintained the 'B' rating of a third hybrid note issued by Dexia on RWN. The rating actions are detailed below. The rating actions follow Fitch's prior rating actions on Dexia's three Tier 1 hybrid instruments which were downgraded to 'B' and placed on RWN on August 20, 2009. On that date, the agency highlighted the increased risk of deferral of interest payments on hybrid instruments for banks that had received significant state support, based on the European Commission's stance on the hybrid capital of state-aided banks within the European Union, in particular the application of the "burden-sharing" concept. The rating actions are: * Hybrid security XS0273230572 issued by Dexia Funding Luxembourg: downgraded to 'CCC' from 'B'; remains on RWN. The downgrade of this hybrid security follows Dexia's announcement that it will waive the next coupon payment due on November 2, 2009. The RWN reflects Fitch's concern over the potential deferral of future coupon payments. * Hybrid security FR0010251421 issued by Dexia Credit Local: downgraded to 'CCC' from 'B'; remains on RWN. The downgrade of this hybrid security reflects the agency's view that, since the coupon payment date of this note is close (November 18, 2009) to that of XS0273230572, it is highly likely that the coupon on this note will also be waived. The RWN similarly reflects Fitch's concern over the potential deferral of future coupon payments. * Hybrid security XS0132253468 issued by Dexia Banque Internationale a Luxembourg: 'B'; maintained on RWN. This security has been maintained on RWN to reflect the possibility of a coupon deferral on this instrument. The next coupon on this note is due on July 6, 2010. DEXIA FUNDING: Nonpayment of Coupons Cue S&P's Junk Rating ---------------------------------------------------------- Standard & Poor's Ratings Services said that it has lowered to 'CC' from 'B' the ratings on EUR500 million in hybrid capital securities issued by Dexia Funding Luxembourg S.A. and EUR700 million in hybrid capital securities issued by Dexia Credit Local. S&P also placed both ratings on CreditWatch with negative implications. In a related action, S&P affirmed its 'B' ratings on Dexia's other hybrid and junior subordinated debt instruments. This rating action does not affect the counterparty credit ratings on Dexia group's core operating entities. The downgrade on the EUR500 million DFL hybrid instrument follows the Dexia's announcement on Oct. 9, 2009, that it would not pay the next coupon due on Nov. 2, 2009. Dexia announced that the payment on the coupon is discretionary. The decision to suspend coupon payment follows the European Commission's communication on Oct. 8, 2009 that banks under EC investigation should refrain from making payments that could reduce its capitalization, which includes coupons on hybrid instruments. "The downgrade on the EUR700 million DCL hybrid instrument takes into account S&P's opinion that the payment of the next coupon due on the instrument on Nov. 18, 2009 is optional and will very likely be deferred," said Standard & Poor's credit analyst Taos Fudji. "We have affirmed the 'B' ratings on the other Tier 1 and upper Tier 2 instruments mainly because S&P believes that the coupons due in the immediate future are nondiscretionary according to their terms and conditions," said Mr. Fudji. The 'B' ratings reflect S&P's concern that the deferral risk on coupon payment will remain elevated as long as Dexia's discussions with the EC over approval of its restructuring plan are continuing. That's because S&P believes that the EC's position is that government funds granted to struggling banks should be retained to strengthen capitalization and should not be paid out to shareholders or holders of other capital instruments, including hybrid securities. Despite this position, S&P understands that the EC is expected to respect the terms and conditions of the hybrid and junior subordinated capital instruments. The negative implications on the CreditWatch placement of the DFL and DCL hybrid instruments reflect the high likelihood of deferral on the next coupon payments due Nov. 2 and Nov. 18, 2009. S&P would lower the junior subordinated debt rating assigned to these issues to 'C' if the coupon is missed on the day it is due. Under its criteria, S&P use the 'C' rating when coupon suspension is in accordance with the terms of a hybrid instrument. ===================== N E T H E R L A N D S ===================== AEGON NV: Raises US$650 Million for U.S. Operations --------------------------------------------------- Aegon N.V. has successfully completed a capital management transaction that will make available approximately US$650 million of additional regulatory capital to its US operations. The transaction, which has an initial size of US$900 million, serves to realize the value of a portion of future profits associated with an existing book of traditional life business. The term of the transaction between AEGON and JPMorgan Chase Bank is ten years. "Improving returns of AEGON's businesses continues to be one of our key priorities," said AEGON CFO Jan Nooitgedagt. "This latest transaction, which is part of our capital preservation program, will further strengthen our overall capital position and enable us to manage our capital more effectively." Between the third quarter of 2008 and the second quarter of 2009, AEGON released EUR3.3 billion of capital from its businesses and is committed to exploring additional capital preservation initiatives. (in EUR millions) Key figures 2nd Quarter Full Year 2008 ----------- ----------- -------------- Underlying earnings before tax 404 1,570 New life sales 469 2,630 Gross deposits 6,800 40,750 Revenue generating investments 342,000 332,000 (End of period) Headquartered in The Hague, Netherlands, Aegon N.V. -- http://www.aegon.com/-- operates as a life insurance and pension company. The company's businesses focus on life insurance, pensions, savings and investment products. The AEGON Group is also active in accident, supplemental health, general insurance and some limited banking activities. The company's major markets are the United States, the Netherlands and the United Kingdom. In addition, AEGON operates in over 20 other markets in the Americas, Europe and Asia. The AEGON Group has four geographic segments: the Americas (which include the United States, Canada and Mexico), the Netherlands, the United Kingdom, and Other Countries, which include Hungary, Spain, Taiwan, China, Poland and a number of other countries with smaller operations. In December 2007, AEGON USA acquired 100% of the shares of Merrill Lynch Life Insurance Company and ML Life Insurance Company of New York. * * * AEGON received EUR3 billion in aid from the Dutch government last year to bolster capital amid the global financial crisis. Aegon NV posted a net loss of EUR161 million in the second quarter of 2009, its fourth straight quarterly loss. The second-quarter loss was driven by EUR393 million of asset writedowns as well as a loss of EUR385 million on the sale of its Taiwanese life-insurance unit to Zhongwei Co. LEO MESDAG: Fitch Cuts Ratings on Two Classes of Notes to 'B' ------------------------------------------------------------- Fitch Ratings has downgraded Leo Mesdag's CMBS notes: -- EUR642.5 million class A (XS0266637171) downgraded to 'A' from 'AAA'; Outlook Stable -- EUR40,000 class X (XS0266644896) affirmed at 'AAA'; Outlook Stable -- EUR20.5 million class B (XS0266638146) downgraded to 'A' from 'AAA'; Outlook Stable -- EUR112.5 million class C (XS0266642171) downgraded to 'BB' from 'AA'; Outlook Stable -- EUR142.5 million class D (XS0266642767) downgraded to 'B' from 'A'; Outlook Stable -- EUR82 million class E (XS0266644383) downgraded to 'B' from 'BBB'; Outlook Stable The downgrades are driven by the steep fall in European commercial property values, rather than any deterioration in transaction performance since closing in September 2006. Based on prevailing market conditions, Fitch estimates a current loan-to-value ratio of 100%, compared to the reported LTV of 71%. Fitch's criteria for European CMBS surveillance were used to analyze the quality of the underlying commercial loans. Given its single-tenant nature, Fitch analyzed the transaction by assuming an immediate default of the tenant. The ratings are based on the agency's expected recoveries on the portfolio following a default of the tenant, net of all costs that might be incurred in such a situation (including the repayment of liquidity drawings). Key assumptions in Fitch's analysis include the length of time to achieve a re-letting on some or all of the space, costs associated with a re-letting (including letting fees and capital expenditure), rents per square meter that can be achieved on the space in a period of stress, and rent-free periods that might be required to attract new tenants. Leo Mesdag is a single-borrower securitization backed by a portfolio of 70 department stores and three car parks located throughout the Netherlands. All properties are occupied by a single tenant, Maxeda, operating under the three brands -- Bijenkork, Hema and V&D -- with a weighted-average lease term of over 17 years. The interest-only loan is scheduled to mature in December 2014, with the bonds' final legal maturity date in December 2019. The transaction collateral's performance has been trending upward, as evidenced by the inflationary rental uplifts that have increased net operating income by 7.2% to EUR67.8 million since closing. According to the estimated rental value determined at the time of the original valuation (in May 2006), the leases are still 8% reversionary. While the portfolio has been re-valued twice since closing, this has only resulted in a modest uplift in market value of 2% to EUR1.4 billion. Fitch will continue to monitor the performance of the transaction. LEVERAGED FINANCE: Moody's Junks Rating on EUR6MM Class R Notes --------------------------------------------------------------- Moody's Investors Service announced these rating actions on notes issued by Leveraged Finance Europe Capital III B.V. -- EUR213.6M A, Downgraded to Aa2; previously on Oct 26, 2004 Definitive Rating Assigned Aaa -- EUR26.25M B, Downgraded to Baa2; previously on Mar 4, 2009 Aa2 Placed Under Review for Possible Downgrade -- EUR11.7M C, Downgraded to Ba3; previously on Mar 20, 2009 Downgraded to Ba1 and Remained On Review for Possible Downgrade -- EUR19.8M D, Downgraded to Caa2; previously on Mar 20, 2009 Downgraded to B2 and Remained On Review for Possible Downgrade -- EUR7.35M E, Confirmed at Caa3; previously on Mar 20, 2009 Downgraded to Caa3 and Remained On Review for Possible Downgrade -- EUR10M Q, Upgraded to Baa1; previously on Oct 26, 2004 Assigned Baa2 -- EUR6M R, Downgraded to Caa1; previously on Oct 26, 2004 Assigned Ba3 This transaction is a managed cash leveraged loan collateralized loan obligation related to a portfolio of mostly senior secured loans and some mezzanine loan exposure and second lien loans (7.54%). The rating actions reflect Moody's revised assumptions with respect to default probability and the calculation of the diversity score as described in the press release dated February 4, 2009, titled "Moody's updates key assumptions for rating CLOs." These revised assumptions have been applied to all corporate credits in the underlying portfolio, the revised assumptions for the treatment of ratings on "Review for Possible Downgrade", "Review for Possible Upgrade", or with a "Negative Outlook" being applied to those corporate credits that are publicly rated. Moody's also notes that, for the purpose of monitoring this transaction, a material proportion of the collateral pool consists of debt obligations whose credit quality has been assessed through Moody's credit estimates. As credit estimates do not carry credit indicators such as ratings reviews and outlooks, a stress of a quarter notch-equivalent assumed downgrade was applied to each of these estimates. According to Moody's, the rating actions taken on the notes are also a result of credit deterioration of the underlying portfolio. This is observed through a decline in the average credit rating as measured through the portfolio weighted average rating factor 'WARF' (currently 2613), an increase in the amount of defaulted securities (currently 3.97% of the portfolio), an increase in the proportion of securities from issuers rated Caa1 and below (currently 6.70% of the portfolio), and a failure of Class E par value test. These measures were taken from the recent trustee report dated August 31, 2009. Moody's also performed a number of sensitivity analyses, including consideration of a further decline in portfolio WARF quality. Due to the impact of all the aforementioned stresses, key model inputs used by Moody's in its analysis, such as par, weighted average rating factor, and weighted average recovery rate, may be different from trustee's reported numbers. Moody's notes that the upgrade action on the Class Q combination notes have incorporated the aforementioned stresses as well as credit deterioration in the underlying portfolio. The action reflects the significant payments received in respect of each component of the combination notes since closing. In addition to the quantitative factors that are explicitly modelled, qualitative factors are part of the rating committee considerations. These qualitative factors include the structural protections in each transaction, the recent deal performance in the current market environment, the legal environment, specific documentation features and the collateral manager's track record. All information available to rating committees, including macroeconomic forecasts, input from other Moody's analytical groups, market factors, and judgments regarding the nature and severity of credit stress on the transactions, may influence the final rating decision. MESDAG BV: Fitch Junks Rating on Class E Notes From 'BBB-' ---------------------------------------------------------- Fitch Ratings has downgraded MESDAG (Charlie) B.V.'s commercial mortgage-backed floating rate notes: -- EUR318.3 million class A (XS0289819889): downgraded to 'AA' from 'AAA'; Outlook Negative -- EUR0.05 million class X (XS0289830696): affirmed at 'AAA'; Outlook Stable -- EUR41.0 million class B (XS0289822677): downgraded to 'A' from 'AA'; Outlook Negative -- EUR41.0 million class C (XS0289823568): downgraded to 'BBB' from 'A'; Outlook Negative -- EUR36.1 million class D (XS0289824533): downgraded to 'B' from 'BBB'; Outlook Negative -- EUR9.0 million class E (XS0289824889): downgraded to 'CCC' from 'BBB-'; assigned a Recovery Rating of 'RR5' The downgrades reflect ongoing declines in European commercial real estate values: the pool has a reported weighted-average loan- to-value ratio of 73% compared to Fitch's LTV estimate of 100%, indicating a WA market value decline of 27% since closing. Fitch's criteria for European CMBS surveillance and multifamily analysis were used to analyze the quality of the underlying commercial loans. Mesdag (Charlie) B.V. is a securitization that originally comprised nine commercial mortgage loans originated by NIBC Bank N.V. ('BBB'/'F3'/Stable), which closed in April 2007. Since closing, one loan has prepaid. This, coupled with scheduled amortization, has reduced the pool balance to EUR445.4 million from EUR493.7 million at closing. The loans are secured by 128 properties located across Germany (84.5% by market value (MV)), and the Netherlands (15.5%) with significant exposure to the Berlin multifamily market (44%). One loan is scheduled to mature in 2010, accounting for only 2.6% of the pool, with the remaining loans scheduled to mature between 2011 and 2016. The weighted- average lease term to break of 9.7 years has improved since closing (6.9 years) compared with a WA loan term of 5.0 years. The largest three loans represent a cumulative 81.2% (Tor 43% by MV, Berlin 28% and Tommy 10%). These loans are all secured by good or above-average quality multifamily assets. Since closing these loans have demonstrated stability of cash flow, albeit with limited rental increases despite some improvement in vacancy levels. Given that all of the loans benefit from experienced management with an established record, and are therefore unlikely to experience significant rental income declines over their terms, Fitch's views balloon risk as the main concern for these loans. Deteriorating property market conditions have resulted in Fitch's estimated LTVs to far exceed current reported LTVs, implying sizeable market value declines of 23%-37% since closing. Fitch will continue to monitor the performance of the transaction. OCEANTEAM B.V.: Declared Bankrupt by Amsterdam Court ---------------------------------------------------- The District Court of Amsterdam on Oct. 13 declared Oceanteam B.V., Oceanteam ASA's wholly owned Dutch subsidiary, bankrupt. Oceanteam B.V. is based in Amsterdam and employs 11 people. The bankruptcy of Oceanteam B.V. will not have operational impact on other Oceanteam entities. As previously announced, Oceanteam B.V is also involved in a contractual dispute (with VOF Bouwcombinatie Egmond) which has been arbitrated since September 2006 and which is still under arbitration. Besides having an adverse affect on the organization's need to focus on market challenges, the cost of arbitration has been and continues to be significant, and Oceanteam B.V is no longer in the position to account for those costs, nor to account for the outcome should it turn out to the disfavor of Oceanteam B.V. Oceanteam ASA has so far supported the funding of Oceanteam B.V, but after due and careful consideration of all aspects of the matter, the board of Oceanteam ASA has now concluded that the support should stop in order not to interfere with the restructuring process. The Oceanteam group is continuing its restructuring program and will focus on the provision of construction support vessels and related services and equipment. =========== R U S S I A =========== ALP-SERVIS LLC: Creditors Must File Claims by October 25 -------------------------------------------------------- Creditors of LLC Alp-Servis (TIN 6901042335, PSRN 1036900084132) (Construction) have until October 25, 2009, to submit proofs of claims to: D. Izotov Temporary Insolvency Manager Sovetskaya Str. 25 170100 Tver Russia The Arbitration Court of Tverskaya will convene at 3:00 p.m. on November 9, 2009, to hear bankruptcy supervision procedure. The case is docketed under Case No. ?66�6709/2009. The Debtor can be reached at: LLC Alp-Servis Rzhev Tverskaya Russia ARDON-STROY LLC: Creditors Must File Claims by October 25 --------------------------------------------------------- Creditors of LLC Ardon-Stroy (Construction) have until October 25, 2009, to submit proofs of claims to: Ye.Pushnova Temporary Insolvency Manager Post User Box 51 123056 Moscow Russia The Arbitration Court of Moskovskaya will convene on January 26, 2010, to hear bankruptcy supervision procedure. The case is docketed under Case No. ?41�25966/09. The Debtor can be reached at: LLC Ardon-Stroy Komsomolskaya Str. 13 Krasnoarmeysk Moskovskaya Russia BANK SOYUZ: Moody's Withdraws 'E' Bank Financial Strength Rating ---------------------------------------------------------------- Moody's Investors Service has withdrawn these ratings of Bank Soyuz: -- Bank financial strength rating of E -- The long-term and short-term foreign and local currency deposit ratings of Caa1/Not Prime -- The senior unsecured foreign currency debt rating of Caa1 Concurrently, Moody's Interfax Rating Agency withdrew Soyuz's long-term national scale rating of Ba3.ru. The ratings have been withdrawn because Moody's believes it lacks adequate information to maintain the ratings. Soyuz's E BFSR carried a stable outlook at the time of the rating withdrawal, while its long-term Caa1 local and foreign currency deposit ratings and Caa1 senior unsecured foreign currency debt rating, as well as the bank's Ba3.ru NSR were on review for possible downgrade. Moody's commented that it was not able to conclude the rating review or continue to maintain the bank's ratings in this particular situation based solely on publicly available information, after the issuer's official request to withdraw the ratings. The rating agency's view on the lack of information concerns particularly the asset quality and recapitalization plans for the bank. Soyuz's loan participation notes -- rated by Moody's at the time of the withdrawal -- remain outstanding in the amount of US$23.5 million maturing on February 16, 2010. Moody's notes that it will no longer maintain rating or research coverage on these loan participation notes. There is no other Moody's-rated debt outstanding for Soyuz. The process of review of Soyuz's ratings started on 28 January 2009, when Moody's downgraded the bank's deposit and debt ratings to Caa1 from B2 and its NSR to Ba3.ru from Baa1.ru and placed the ratings on review for possible further downgrade. Simultaneously, Moody's lowered Bank Soyuz's BFSR to E (stable outlook) from E+. Domiciled in Moscow, Russia, Bank Soyuz reported -- as at December 31, 2007 (latest available IFRS figures) -- total IFRS assets of US$3.7 billion, total shareholders' equity of US$472 million and a net income of US$42 million. As per the Russian statutory Accounting Standards (RAS), at H1 2009 the bank reported total assets of US$2.4 billion and total shareholders' equity of US$139 million. For the first half of 2009 the total RAS loss amounted to US$55 million. MOSCOW BANK: Fitch Affirms Individual Rating at 'E' --------------------------------------------------- Fitch Ratings has affirmed Moscow Bank for Reconstruction and Development's and Dalcombank's Long-term Issuer Default Ratings at 'B+' respectively, thereby resolving the Rating Watch Negative on these ratings. Stable Outlooks have been assigned to these ratings. A full list of rating actions on both banks is provided at the end of this announcement. The rating actions follow the recent affirmation of Sistema Joint Stock Financial Corp.'s Long-term foreign currency IDR at 'BB-' with a Stable Outlook. Sistema is the main shareholder of MBRD and, through MBRD, Dalcombank. The ratings of MBRD and Dalcombank reflect Fitch's view of the strong propensity of Sistema to provide support to these banks in case of need, but also factor in the potentially limited ability of Sistema to provide support, as reflected in its ratings. The future direction of the banks' ratings is likely to continue to depend on Sistema's Long-term IDR and Fitch's view of the parent's propensity to support the group's banks. MBRD's stand-alone credit profile, and its Individual Rating of 'D/E', are under pressure as a result of asset quality deterioration and weakened capitalization. Loans overdue by more than 90 days accounted for 7% of total loans at end-July 2009 and about a third of total loans had been restructured with extended maturities. Fitch also notes that at end-July 2009, MBRD had invested RUB5.6 billion in a fund which had utilized RUB3 billion (equal to 24% of regulatory capital) to acquire assets received by the bank as a result of loan foreclosures. The low transparency of the operations of MBRD's Luxembourg-based subsidiary, East-West United Bank (EWUB; which accounts for 35% of consolidated loans), is another source of concern, although management disclosure suggests that a majority of the subsidiary's operations are low risk (cash-backed). MBRD's reserves/loans ratio of 7.1% and regulatory capital ratio of 11.1% at end-8M09 (local GAAP) indicate limited loss absorption capacity, and immediate capital raising plans are limited to a moderate (up to RUB1.9 billion) subordinated loan from Sistema. At the same time, Fitch notes that the regulatory capital ratio is negatively impacted by the full deduction of investments in subsidiaries, and that Basel consolidated ratios may be higher (although these have not been calculated at end-H109). MBRD has potentially significant short-term refinancing risk, as all its four local bonds have put options in 2010; however, the majority of these amounts relate to non-market placements, and this risk should therefore be manageable, in Fitch's view. DCB's Individual Rating of 'E' reflects its small size, asset quality problems, vulnerable liquidity position and weak capitalization. As at MBRD, the retail book is the main loan impairment driver. A small cushion of liquid assets, equal to just 10% of customer and interbank funding as of end-July 2009, and the on-demand nature of most customer funding makes the bank's stand alone liquidity position weak. In April 2009, the capitalization of DCB was supported by a RUB250 million equity injection, bringing the regulatory capital ratio to 13% at end- 8M09. Further asset quality deterioration without adequate recapitalization could further undermine the banks' stand-alone financial profiles and result in a downgrade of MBRD's Individual Rating. Upside potential for the ratings is currently limited given the difficult operating environment and loan impairment trends. MBRD is a medium-sized Russian bank, 95%-owned by Sistema. Servicing the needs of Sistema remains an important part of MBRD's business. In December 2007, MBRD acquired a 66% stake in Luxembourg-based EWUB from Sistema. In February 2009, MBRD became the sole owner of DCB, almost two years after Sistema purchased the latter. DCB is a small-sized Russian bank based in Khabarovsk with a broad presence in other regions of the far east of Russia. Rating actions: MBRD -- Long-term IDR affirmed at 'B+'; removed from RWN; assigned Stable Outlook -- Short-term IDR affirmed at 'B' -- Individual affirmed at 'D/E' -- Support affirmed at '4' -- National Long-term affirmed at 'A-(rus)'; removed from RWN; Outlook Stable Dalcombank -- Long-term IDR affirmed at 'B+'; removed from RWN; assigned -- Stable Outlook -- Short-term IDR affirmed at 'B' -- Individual affirmed at 'E' -- Support affirmed at '4' -- National Long-term affirmed at 'A-(rus)'; removed from RWN; Outlook Stable In Fitch's rating criteria, a bank's standalone risk is reflected in Fitch's Individual ratings and the prospect of external support is reflected in Fitch's Support ratings. Collectively these ratings drive Fitch's Long- and Short-term IDRs. MOSCOW CAPITAL: Moody's Withdraws 'E' Bank Strength Rating ---------------------------------------------------------- Moody's Investors Service has withdrawn these ratings of Moscow Capital Bank: -- Bank financial strength rating of E -- The long-term and short-term foreign and local currency deposit ratings of C/Not Prime Concurrently, Moody's Interfax Rating Agency withdrew MCB's long- term national scale rating of C.ru. Moscow-based Moody's Interfax is majority owned by Moody's, a leading global rating agency. Moody's withdrawal of its bank financial strength and deposit ratings for MCB is a result of the withdrawal of MCB's banking license by the Central Bank of Russia on February 2, 2009 which was due to violation of laws, deterioration of capital adequacy to a level below 2%, and failure by the bank to meet its obligations to creditors. As a result of the withdrawal of its banking license, MCB is no longer a deposit taking institution and no longer has outstanding deposits. Moody's further notes that, as of the date of the ratings withdrawal, MCB had no senior unsecured, subordinate or structured finance obligations rated by Moody's. Domiciled in Moscow, Russia, Moscow Capital Bank reported -- as at December 31, 2007 (latest available IFRS figures) -- total IFRS assets of US$985 million, total shareholders' equity of US$92 million and a net income of US$20 million. As per the Russian statutory Accounting Standards, as at April 30, 2009 the bank reported total assets of RUB4 billion (US$120 million) (excluding provisions and depreciation) and cash and equivalents of RUB46 million, while total liabilities comprised RUB11 billion. GRAZHDAN-STROY CJSC: Creditors Must File Claims by October 25 ------------------------------------------------------------- Creditors of CJSC Grazhdan-Stroy-Proekt (Construction)have until October 25, 2009, to submit proofs of claims to: D. Krylov Insolvency Manager Ryabinovyy pereulok 7 305014 Kursk Russia The Arbitration Court of Kurskaya commenced bankruptcy proceedings against the company after finding it insolvent. The case is docketed under Case No. A35�6486/2009. The Debtor can be reached at: CJSC Grazhdan-Stroy-Proekt Office 5 Leninskogo Komsomola Str. 64 Kursk Russia KIT FINANCE: Moody's Withdraws 'Caa2' Currency Deposit Ratings -------------------------------------------------------------- Moody's Investors Service has withdrawn these ratings of KIT Finance: -- Long-term and short-term local and foreign currency deposit ratings of Caa2/Not Prime (Stable); -- Bank financial strength rating of E (Stable); Concurrently, Moody's Interfax Rating Agency withdrew KIT's long- term national scale rating of B2.ru. Moscow-based Moody's Interfax is majority owned by Moody's, a leading global rating agency. Moody's has withdrawn these ratings for business reasons following the official request from KIT. Moody's notes that, as of the date of the ratings withdrawal, KIT had no outstanding senior unsecured, subordinate or structured finance obligations rated by Moody's. The previous rating action for KIT was on September 28, 2009 when Moody's confirmed all ratings of KIT with a stable outlook. Based in St. Petersburg, Russia, KIT was a multiple business line entity, albeit dominated by investment and corporate banking and mortgage activities. After the default on September 17, 2008, its assets became mainly composed of the mortgage loan book as well as investment assets. It recorded total assets of ca. US$4 billion at year-end 2008 and is ranked among the 50 largest banks in Russia. KVARTAL LLC: Creditors Must File Claims by October 25 ----------------------------------------------------- Creditors of LLC Kvartal (TIN 5612039638, PSRN 1045608402498) (Construction) have until October 25, 2009, to submit proofs of claims to: Yu.Ustimova Temporary Insolvency Manager Leninskaya Str.3/1 460000 Orenburg Russia The Arbitration Court of Orenburgskaya will convene at 9:00 a.m. on January 12, 2010, to hear bankruptcy supervision procedure. The case is docketed under Case No. ?47�7183/2009. The Debtor can be reached at: LLC Kvartal Tsvillinga Str. 46 460000 Orenburg Russia MOSCOW BANK: Fitch Affirms Individual Rating at 'D/E' ----------------------------------------------------- Fitch Ratings has affirmed Moscow Bank for Reconstruction and Development's and Dalcombank's Long-term Issuer Default Ratings at 'B+' respectively, thereby resolving the Rating Watch Negative on these ratings. Stable Outlooks have been assigned to these ratings. A full list of rating actions on both banks is provided at the end of this announcement. The rating actions follow the recent affirmation of Sistema Joint Stock Financial Corp.'s Long-term foreign currency IDR at 'BB-' with a Stable Outlook. Sistema is the main shareholder of MBRD and, through MBRD, Dalcombank. The ratings of MBRD and Dalcombank reflect Fitch's view of the strong propensity of Sistema to provide support to these banks in case of need, but also factor in the potentially limited ability of Sistema to provide support, as reflected in its ratings. The future direction of the banks' ratings is likely to continue to depend on Sistema's Long-term IDR and Fitch's view of the parent's propensity to support the group's banks. MBRD's stand-alone credit profile, and its Individual Rating of 'D/E', are under pressure as a result of asset quality deterioration and weakened capitalization. Loans overdue by more than 90 days accounted for 7% of total loans at end-July 2009 and about a third of total loans had been restructured with extended maturities. Fitch also notes that at end-July 2009, MBRD had invested RUB5.6 billion in a fund which had utilized RUB3 billion (equal to 24% of regulatory capital) to acquire assets received by the bank as a result of loan foreclosures. The low transparency of the operations of MBRD's Luxembourg-based subsidiary, East-West United Bank (EWUB; which accounts for 35% of consolidated loans), is another source of concern, although management disclosure suggests that a majority of the subsidiary's operations are low risk (cash-backed). MBRD's reserves/loans ratio of 7.1% and regulatory capital ratio of 11.1% at end-8M09 (local GAAP) indicate limited loss absorption capacity, and immediate capital raising plans are limited to a moderate (up to RUB1.9 billion) subordinated loan from Sistema. At the same time, Fitch notes that the regulatory capital ratio is negatively impacted by the full deduction of investments in subsidiaries, and that Basel consolidated ratios may be higher (although these have not been calculated at end-H109). MBRD has potentially significant short-term refinancing risk, as all its four local bonds have put options in 2010; however, the majority of these amounts relate to non-market placements, and this risk should therefore be manageable, in Fitch's view. DCB's Individual Rating of 'E' reflects its small size, asset quality problems, vulnerable liquidity position and weak capitalization. As at MBRD, the retail book is the main loan impairment driver. A small cushion of liquid assets, equal to just 10% of customer and interbank funding as of end-July 2009, and the on-demand nature of most customer funding makes the bank's stand alone liquidity position weak. In April 2009, the capitalization of DCB was supported by a RUB250 million equity injection, bringing the regulatory capital ratio to 13% at end- 8M09. Further asset quality deterioration without adequate recapitalization could further undermine the banks' stand-alone financial profiles and result in a downgrade of MBRD's Individual Rating. Upside potential for the ratings is currently limited given the difficult operating environment and loan impairment trends. MBRD is a medium-sized Russian bank, 95%-owned by Sistema. Servicing the needs of Sistema remains an important part of MBRD's business. In December 2007, MBRD acquired a 66% stake in Luxembourg-based EWUB from Sistema. In February 2009, MBRD became the sole owner of DCB, almost two years after Sistema purchased the latter. DCB is a small-sized Russian bank based in Khabarovsk with a broad presence in other regions of the far east of Russia. Rating actions: MBRD -- Long-term IDR affirmed at 'B+'; removed from RWN; assigned Stable Outlook -- Short-term IDR affirmed at 'B' -- Individual affirmed at 'D/E' -- Support affirmed at '4' -- National Long-term affirmed at 'A-(rus)'; removed from RWN; Outlook Stable Dalcombank -- Long-term IDR affirmed at 'B+'; removed from RWN; assigned -- Stable Outlook -- Short-term IDR affirmed at 'B' -- Individual affirmed at 'E' -- Support affirmed at '4' -- National Long-term affirmed at 'A-(rus)'; removed from RWN; Outlook Stable In Fitch's rating criteria, a bank's standalone risk is reflected in Fitch's Individual ratings and the prospect of external support is reflected in Fitch's Support ratings. Collectively these ratings drive Fitch's Long- and Short-term IDRs. NEVELSKIY MILK: Creditors Must File Claims by October 25 -------------------------------------------------------- Creditors of LLC Nevelskiy Milk Canning Plant (TIN 6009005149, PSRN 1026000617631) have until October 25, 2009, to submit proofs of claims to: A. Isayev Temporary Insolvency Manager Post User Box 42 180000 Pskov Russia The Arbitration Court of Pskovskaya will convene at 10:30 a.m. on December 17, 2009, to hear bankruptcy supervision procedure. The case is docketed under Case No. ?52�3193/2009. The Debtor can be reached at: LLC Nevelskiy Milk Canning Plant M. Mametovoy Str. 7 Nevel 182500 Pskovskaya Russia PENOVSKAYA FORESTRY: Court Names V.Shemigon as Insolvency Manager ----------------------------------------------------------------- The Arbitration Court of Tverskaya appointed V.Shemigon as Insolvency Manager for LLC Penovskaya Forestry. The case is docketed under Case No. ?66�5615/2009. He can be reached at: Building 2 Novyy Arbat Sr. 1 172770 Tverskaya Russia The Debtor can be reached at: LLC Penovskaya Forestry Rodina Str. 50 Peno Penovskiy 172770 Tverskaya Russia SEVER-GEO LLC: Creditors Must File Claims by October 25 ------------------------------------------------------- Creditors of LLC Sever-Geo-Fizika Oil Company have until October 25, 2009, to submit proofs of claims to: A. Stankevich Temporary Insolvency Manager Apt. 5 Kommunisticheskaya Str. 44/2 167001 Sykvyvkar Komi Russia The Arbitration Court of Komi will convene on January 14, 2010, to hear bankruptcy supervision procedure. The case is docketed under Case No. ?29�7881/2009. The Debtor can be reached at: LLC Sever-Geo-Fizika Ukhta Komi Russia TARSK LES: Creditors Must File Claims by November 25 ---------------------------------------------------- Creditors of LLC Tarsk Les (TIN 7011003045, PSRN 1027003753809) (Wood-processing) have until November 25, 2009, to submit proofs of claims to: A. Saranin Insolvency Manager Post User Box 3020 634003 Tomsk Russia The Arbitration Court of Tomskaya commenced bankruptcy proceedings against the company after finding it insolvent. The case is docketed under Case No. ?67�1456/09. The Debtor can be reached at: LLC Tarsk Les Tarsk Parabelskiy 636630 Tomskaya Russia VAVILON LLC: Astrakhanskaya Bankruptcy Hearing Set November 26 -------------------------------------------------------------- The Arbitration Court of Astrakhanskaya will convene at 2:00 p.m. on November 26, 2009, to hear bankruptcy supervision procedure on LLC Vavilon (TIN 3015061700, PSRN 1033000814164)(Construction). The case is docketed under Case No. ?06�4441\2009. The Temporary Insolvency Manager is: V.Kornilyev Post User Box 290 414000Astrakhan Russia The Debtor can be reached at: LLC Vavilon Zhelyabova Str. 43 414000 Astrakhan Russia VOLGOGRADSKIY VEHICLE: S. Kagitin Named Insolvency Manager ---------------------------------------------------------- The Arbitration Court of Volgogradskaya appointed S.Kagitin as Insolvency Manager for CJSC Volgogradskiy Vehicle Plant (TIN 3443040382, PSRN 1023402974451). The case is docketed under Case No. ?12�228/09. He can be reached at: Post User Box 3113 400105 Volgograd Russia The Debtor can be reached at: CJSC Volgogradskiy Vehicle Plant Seriynyy proezd 5 400075 Volgograd Russia * RUSSIA: Moody's Sees Negative Rating Pressure on Banks -------------------------------------------------------- Moody's Investors Service sees negative rating pressure on Russian banks in the near-to-medium-term, reflecting the rating agency's concerns over the credit fundamentals of domestic banks. The first wave of the global financial crisis that struck Russian banks 12 months ago has been contained by timely and adequate actions by the government and the Central Bank of Russia. However, the risk of further instability in the banking system remains relatively high due to negative pressure on capitalization and profitability against a background of deteriorating asset quality and liquidity caused by weak depositor confidence and asset-liability mismatches. Moody's negative outlook for the Russian banking system expresses the rating agency's view on the likely future direction of fundamental credit conditions in the industry over the next 12 to 18 months. It does not represent a projection of rating upgrades versus downgrades. As in the past, the dynamics of the Russian banking sector will be largely driven by macroeconomic developments. Strong economic growth in the past eight years had supported banks' lending expansion at or above 40% per annum. With Russia now in recession, the operating environment for banks has become hostile. GDP contracted more than 10% in the first half of 2009, and Moody's expects the economy to shrink by 8.5% for the whole year. The rating agency predicts only modest 1.7% economic growth in 2010 -- rebounding more strongly in 2011. For many banks, these growth expectations would require at least 12 months of reducing financial leverage, combined with working out problem loans, attracting new capital, repaying foreign debt and reassessing their funding strategies. "Despite a hostile operating environment, the Russian banking system as a whole has shown adequate resilience to the crisis so far, largely due to state support", said Eugene Tarzimanov, a Moscow-based Moody's Assistant Vice President-Analyst, and author of the report. Asset quality and capitalization therefore represent medium-term risks for Russian banks, and in Moody's opinion they are not likely to materially damage the banking system in the short term. The state has put in place various anti-crisis mechanisms, ranging from liquidity to capital injections. Moody's notes that the state support package is one of the largest among emerging markets, exceeding 10% of GDP (ca. US$170 billion, mostly through liquidity injections). "The Russian government is committed to supporting the stability of the banking system, as highlighted by numerous bank bailouts and the government is likely to be more selective in channelling its support to banks, providing capital and liquidity to banks of systemic or regional importance. The beneficiaries of this support are state banks, which are taking market share from private sector banks," adds Mr. Tarzimanov. As regards asset quality, Moody's estimates that around 11% of loans (US$70 billion) -- mostly granted pre-crisis to the corporate sector -- were problematic at mid-2009. Additionally, an equally high level of loans had been restructured. The stock of problem loans is likely to exceed US$110 billion by YE2009, which would account for 20% of gross loans. This projected level of asset quality deterioration should be manageable for the banking sector, to be absorbed by available and upcoming capital, as well as reserves. By YE2010, barring any economic shocks, Moody's would expect problem loans to grow to 25% of gross loans, largely driven by impairment in restructured loans and moderate new lending. Additional pressure on asset quality stems from foreign currency (FX) loans, which comprised around one-third of the total at mid- 2009. Moody's estimates that expected losses on FX loans are 70- 100% higher compared to rouble-denominated loans. In this context, FX loans expose banks to high credit risk as the rating agency forecasts a 10% depreciation of the rouble against the dollar by YE2009. Of the ca. 20 Russian banks that collapsed as a result of the crisis, most had encountered severe liquidity problems when faced with significant retail and corporate deposit outflows. On average, Moody's-rated Russian banks faced a 10-15% depletion of their deposits in the weeks following the crisis, and the rating agency believes that weak depositor confidence is one of the major threats to the Russian banking system. Moody's notes that liquidity support from the CBR and the Ministry of Finance helped to avert a more severe banking crisis. Currently, many Russian banks face the major medium-term risk of becoming materially dependent on CBR funding, which is relatively short term and will be withdrawn from the banking system at some point. While the CBR's "exit strategy" is unclear at this stage, Moody's believes that this process would be gradual in order to avoid destabilizing the banking system. However, the weakest institutions could find it difficult to repay borrowings from the CBR. Despite negative developments in the Russian banking system, the asset-weighted Bank Financial Strength Rating remained at D- over the past 12 months, mapping into a Baseline Credit Assessment (BCA) of Ba3. This is explained by the high concentration of system assets in a few large banks, mostly state-owned (top 5 exceed 50%). Moody's took negative rating actions on about one- quarter of rated Russian banks since the start of crisis in September 2008; these actions were driven by weaker stand-alone credit fundamentals, changes in systemic support assumptions, and defaults and banks being put into administration. The ratings of the other three-quarters of rated banks were not affected by the crisis due to their low rating levels that had already implied a high rating transition risk (B2 to B3 debt and deposit ratings). Further negative rating actions are likely at selected banks, if their creditworthiness deteriorates beyond Moody's base-case scenario for asset quality and liquidity, which already incorporates a relatively high level of stress. Banks' risk positioning remains a historical weakness in Russia. In particular, balance sheets are highly concentrated on selected clients, market risk appetite is high, and related-party deals are omnipresent. With a few exceptions, risk management, corporate governance, as well as transparency and disclosure all remain below international best practices. Moody's therefore notes that improvements in those areas would be key prerequisites for any positive rating actions. ===================== S W I T Z E R L A N D ===================== DDL HORLOGERIE: Claims Filing Deadline is December 15 ----------------------------------------------------- Creditors of Ddl Horlogerie are requested to file their proofs of claim by December 15, 2009, to: Boris Delfs Place de la Gare 13 2502 Biel/Bienne Switzerland The company is currently undergoing liquidation in Biel/Bienne. The decision about liquidation was accepted at an extraordinary general meeting held on July 13, 2009. MUNOT TAXI: Claims Filing Deadline is December 22 ------------------------------------------------- Creditors of Munot Taxi GmbH are requested to file their proofs of claim by December 22, 2009, to: Munot Taxi Ruech Muehlentalstr. 248 8200 Schaffhausen Switzerland The company is currently undergoing liquidation in Schaffhausen. The decision about liquidation was accepted at a shareholders' meeting held on April 23, 2009. ============= U K R A I N E ============= LEON-MOKOM LLC: Creditors Must File Claims by October 18 ---------------------------------------------------- Creditors of LLC Leon-Mokom (code EDRPOU 20288055) have until October 18, 2009, to submit proofs of claim to: J. Leleko Insolvency Manager Office 214 Semafornaya Str. 36 49124 Dnepropetrovsk Ukraine The Economic Court of Dnepropetrovsk commenced bankruptcy proceedings against the company on September 8, 2009. The case is docketed under Case No. B24/138-09. The Court is located at: The Economic Court of Dnepropetrovsk Kujbishev Str. 1a 49600 Dnepropetrovsk Ukraine The Debtor can be reached at: LLC Leon-Mokom Sholokhov Str. 7 49080 Dnepropetrovsk Ukraine NAFTOKHIMIK PRYKARPATTYA: Facing Bankruptcy, Delo Says ------------------------------------------------------ Kateryna Choursina at Bloomberg News, citing Delo, reports that oil refiner VAT Naftokhimik Prykarpattya is facing bankruptcy after the state tax administration in Nadvirna, western Ukraine, started court proceedings. SAUS TOWN: Creditors Must File Claims by October 18 --------------------------------------------------- Creditors of LLC Saus Town (code EDRPOU 35127976) have until October 18, 2009, to submit proofs of claim to: O. Startseva Insolvency Manager Office 559 Kolobov Str. 21 99038 Sevastopol AR Krym Ukraine The Economic Court of AR Krym commenced bankruptcy proceedings against the company on September 18, 2009. The case is docketed under Case No. 2-19/2505-2009. The Court is located at: The Economic Court of AR Krym R. Luxembourg Str. 29/Rechnaya Str. 11 95000 Simferopol AR Krym Ukraine The Debtor can be reached at: LLC Saus Town Mramornaya Str. 4 Simferopol AR Krym Ukraine TRAY-LIDER LLC: Creditors Must File Claims by October 18 -------------------------------------------------------- Creditors of LLC Tray-Lider (code EDRPOU 33385998) have until October 18, 2009, to submit proofs of claim to: G. Eremenko Insolvency Manager Office 155 Pobeda Ave. 76 Simferopol AR Krym Ukraine The Economic Court of AR Krym commenced bankruptcy proceedings against the company on September 27, 2009. The case is docketed under Case No. 2-12/550-2009. The Court is located at: The Economic Court of AR Krym R. Luxembourg Str. 29/Rechnaya Str. 11 95000 Simferopol AR Krym Ukraine The Debtor can be reached at: LLC Tray-Lider Office 48 Krivoshta Str. 19 Yalta AR Krym Ukraine UKRIMPEKS-2000 LLC: Creditors Must File Claims by October 17 ------------------------------------------------------------ Creditors of LLC Ukrimpeks-2000 (code EDRPOU 30931631) have until October 17, 2009, to submit proofs of claim to: I. Gusar Insolvency Manager Post Office Box 29 01030 Kiev Ukraine The Economic Court of Kiev commenced bankruptcy proceedings against the company on July 22, 2009. The case is docketed under Case No. 15/28-B. The Court is located at: The Economic Court of Kiev B. Hmelnitskiy Str. 44-b 01030 Kiev Ukraine The Debtor can be reached at: LLC Ukrimpeks-2000 Office 401 Metallistov Str. 17 03057 Kiev Ukraine ZIZA LLC: Creditors Must File Claims by October 17 -------------------------------------------------- Creditors of LLC Ziza (code EDRPOU 22322342) have until October 17, 2009, to submit proofs of claim to: P. Maystrenko Insolvency Manager Lebedev Str. 15 95053 Simferopol AR Krym Ukraine The Economic Court of AR Krym commenced bankruptcy proceedings against the company on September 27, 2009. The case is docketed under Case No. 2-19/4410-2009. The Court is located at: The Economic Court of AR Krym R. Luxembourg Str. 29/Rechnaya Str. 11 95000 Simferopol AR Krym Ukraine The Debtor can be reached at: LLC Ziza Lugovaya Str. 6A 95033 Simferopol AR Krym Ukraine ========================== U N I T E D K I N G D O M ========================== COLT TELECOM: Moody's Lifts Corporate Family Rating to 'Ba3' ------------------------------------------------------------ Moody's Investors Service upgraded the Corporate Family Rating of COLT Telecom Group S.A. to Ba3 from B1. The outlook on the rating is stable. The upgrade is driven by the company's continued solid operating performance, its resilience under difficult market conditions, strong debt metrics and liquidity profile. In H1 2009, whilst revenue was down 1.2% over H1 2008, EBITDA increased by 6.3%. The company was successful in growing revenue from its data services such as Ethernet and Managed Services, albeit at a lower pace than in 2008. Since the beginning of the economic recession, COLT has proven its resilience with only modest revenue decline, EBITDA growth and free cash flow generation -- reflecting the company's ability to flex capex in accordance with the business cycle. Revenue decreased from EUR827 million in H1 08 to EUR817 million in the first half of 2009. The reported EBITDA margin has increased to 19.3% from 18% over the same period, due to the greater proportion of higher-margin revenue from data and managed services and stringent cost control. Moody's understands that the 41% decrease in capital expenditure in H1 2009 over H1 2008 is only partly due to softer demand and does not necessarily imply a similar decrease in future revenue growth. Most of the reduction is explained by the availability of sufficient capacity from previous investments, improved capital efficiency and low capex from infrastructure and data centres. However, in the medium term, Moody's expect the capex/revenue ratio to rise from the current 11% to mid-teen levels, in order to support growth in data and managed services revenue. In April 2009, the company redeemed its EUR262 million bonds after a EUR201 million equity offering. In addition to demonstrating shareholder support, this left COLT with no outstanding financial debt. Additionally, COLT reported cash of EUR243 million at 30 June 2009. However, COLT's LTM gross leverage of 1.8x incorporates Moody's adjustments on operating leases. The stable outlook reflects Moody's expectation that the company will continue to modestly grow its revenue and EBITDA from data services, as well as consolidated group EBITDA while acknowledging that Colt remains strongly positioned in the rating category given the recent elimination of its financial debt obligations. The outlook though also reflects the expectation that over the medium term Colt's capital structure will evolve to include financial debt. Although the stable outlook does not incorporate the possibility of material M&A activity, Moody's recognizes the potential for further positive ratings movement if the company retains a conservative leverage profile and shareholder distribution policy, and maintains positive free cash flow when it increases its capex programme or pursues small bolt-on acquisitions. The last rating action was on March 24, 2009 when the Corporate Family Rating was upgraded to B1, with a positive outlook. COLT Telecom Group S.A. is one of the leading alternative telecom providers in the UK and Europe. In 2008, the company generated revenue of EUR1.7 billion and reported EBITDA of EUR303.9 million. ITV PLC: Launches GBP135 Million Bond Issue ------------------------------------------- Hamish Rutherford at The Scotsman reports that ITV plc has unveiled GBP135 million bond issue a day after Sir Michael Bishop, the former boss of UK airline BMI, pulled out of the running to chair the troubled broadcaster. According to the report, ITV said it was issuing bonds to strengthen its balance sheet and extend its debt maturity. Buyers had been found for the bonds, which mature in 2016, by 2:00 p.m. Tuesday, the report discloses. The report relates the company also announced it would retain SDN, its digital terrestrial channel operator, which was put up for sale in April. About ITV plc ITV plc -- http://www.itvplc.com/-- is a United Kingdom-based advertising funded broadcaster. The Company also operates as an advertising funded media owner in the United Kingdom across all media, including television, radio, press, cinema, outdoor and the Internet. As a producer, ITV makes hours of network television. Its digital channels include ITV2, ITV3, ITV4 and Citv. ITV also makes programs for the BBC, Channel 4, five, Sky and other broadcasters. ITV produces programs watched on screens from San Francisco to Sydney. In addition, it produces a range of products related to ITV programs, such as digital video disks (DVDs) and computer games. Its online properties include itv.com, itvlocal.com and Friends Reunited * * * As reported in the Troubled Company Reporter-Europe on Sept. 18, 2009, Standard & Poor's Ratings Services said that it has lowered its long-term corporate credit and senior unsecured debt ratings on U.K. private TV broadcaster ITV PLC to 'B+' from 'BB-'. S&P said the outlook is negative. At the same time, S&P affirmed its 'B' short-term corporate credit rating on ITV. ITV PLC: Trading Update Relieves Pressure on Fitch's 'BB-' Rating ----------------------------------------------------------------- Fitch Ratings said that ITV plc's trading update and moves to strengthen its balance sheet, including a bond issue, are mildly positive for the company's credit profile and should relieve short-term downward pressure on ratings. ITV is rated Long-term Issuer Default and senior unsecured 'BB-', with a Negative Outlook. "Management's comments on current trading show that the sharp year-on-year reduction in advertising revenue seen in the first nine months of the year are moderating going into Q409," said Michael Dunning, Managing Director in Fitch's TMT team in London. "A successful convertible bond placing would bolster ITV's liquidity position and allow the company to further improve its maturity profile." The comments from ITV also confirm Fitch's view that the sharp drop in advertising spending is easing (see "European Media - Mid- year Review" published September 1, 2009). This is important as the group's high operational gearing means its results remain volatile to changes in UK TV advertising spend. The trend seems to be improving with ITV's television advertising revenue falling around 3% y-o-y in October 2009 (with a similar level for November), compared to the 7% drop reported for September 2009, and a 15% decline for H109. ITV's TV advertising accounted for 81% of the group's 2008 revenue. However, given the uncertain economic outlook in the UK, the recovery remains fragile and the agency will continue to look for further evidence that the UK TV advertising market is stabilizing. ITV is also planning to improve the efficiency of its balance sheet. The senior unsecured convertible bond placement (initially for GBP120 million but increased to GBP135 million due to strong investor demand) should allow ITV to improve its debt maturity profile and optimize its cash interest payments. ITV's next debt repayment of around GBP140 million is due in 2011 which is adequately covered by the GBP476 million of cash held at the end of June 2009. The intention to use SDN, ITV's wholly owned digital terrestrial television multiplex operator, to underpin its pension deficit over the long-term should help to minimize medium- term increases in any cash pension contribution required, while realizing tax benefits over the next four years. Fitch notes the recent moves by management have reduced ITV's accounting pension deficit by around GBP100 million from the GBP538 million reported at end-June 2009. Fitch will continue to focus more on the immediate cash impact of pension financing, which is based on actuarial, rather than accounting valuations. ITV's current agreement with its pension trustees sees top-up payments of GBP30 million per annum. As noted in Fitch's comment of August 7, 2009, at 'BB-' Fitch continues to see ITV as sufficiently far from default to give it time to address its pension issues and for the pension deficit to shrink as market conditions normalize. The agency notes that if ITV's IDR was downgraded to 'B+', indicating it was closer to default, its senior unsecured ratings could be downgraded by more than one notch due to claims from the pension beneficiaries. LANDMARK MORTGAGES: Fitch Cuts Rating on Class D Notes to 'CC' -------------------------------------------------------------- Fitch Ratings has downgraded all six tranches of Landmark Mortgages Securities No.2 plc (Landmark 2) and three junior tranches of Landmark Mortgages Securities No.1 plc (Landmark 1). These UK non-conforming RMBS transactions are backed by mortgage loans originated by Amber Home Loans, Unity Home Loans and Infinity Mortgages. The rating actions are listed below. For both transactions, Fitch used its EMEA RMBS surveillance criteria, employing its credit cover multiple methodology, to assess the level of credit support available to each class of notes. The downgrades of Landmark 1's class C and D notes and their Negative Outlooks reflect reserve fund draws and a high arrears rate. All classes of Landmark 1 have benefited significantly from high prepayment rates; however, the prepayment rate has decreased significantly in the last year. Loans that are three months or greater in arrears have increased to 33% in September 2009 from 11% in September 2008. The increase in arrears is primarily due to reduced monthly payments of loans linked to LIBOR or BBR and adverse selection. Non-conforming transactions like Landmark are suffering from adverse selection due to limited refinance opportunities for loans with adverse credit, high loan-to-value ratios and loans currently in arrears. In September 2009 the value of properties in possession decreased to 2.1% of the outstanding collateral balance from 5.1% in March. Fitch notes the volume of new repossessions has decreased recently, which is primarily due to a reduction in monthly mortgage payments making it easier for borrowers to make their current payment. However, the repossessions rate may increase in the near future as nearly 14% of the outstanding balance is more than 12 months in arrears. The reserve fund was drawn in the last three interest payment dates and now stands at 83% of the target amount. In the last three IPDs the transaction suffered total principal losses of GBP1.6 million, of which GBP1.1 million were covered by excess spread and GBP505,753 by the reserve fund. The downgrade of Landmark's notes and their Negative Outlook reflect high loss severities, high arrears rates and risk of further reserve fund draws. Unlike Landmark 1, the notes of Landmark 2 have not benefited from high prepayment rates. At the end of the 10th IPD 52% of the original pool was still outstanding whereas 76% is still outstanding in case of Landmark 2. The arrears and repossession trends of Landmark 2 are similar to those in Landmark 1. Loans that are three months or greater in arrears have increased to 27% in September 2009 from 13% in September 2008. The total value of properties in possession has decreased to 3.2% of the current collateral balance in September 2009 from 5.2% in December 2008. However, the repossessions rate may increase since nearly 12% of the outstanding balance is more than 12 months in arrears. Period loss severities have increased to 41% in September 2009 from 27% in September 2008. To cover increased losses the reserve fund was drawn in the last IPD and now stands at 88% of the target amount. In the last IPD the transaction suffered total principal losses of GBP1.98 million, of which GBP1.62 million were covered by excess spread and GBP361,754 by the reserve fund. Fitch's view of house prices and credit performance of the UK mortgage market are factored into these rating actions. The agency continues to expect that UK house prices will fall approximately 30% overall from the October 2007 peak. Landmark Mortgage Securities No.1 plc: -- Class Aa (ISIN XS0258051191): affirmed at 'AAA'; Outlook Stable; assigned Loss Severity Rating of 'LS-2' -- Class Aa DAC 2011 (ISIN XS0258051357): affirmed at 'AAA'; Outlook Stable -- Class Ac (ISIN XS0260674725): affirmed at 'AAA'; Outlook Stable; assigned Loss Severity Rating of 'LS-2' -- Class Ac DAC 2011 (ISIN XS0260674998): affirmed at 'AAA'; Outlook Stable -- Class B (ISIN XS0260675888): affirmed at 'A'; Outlook Stable; assigned Loss Severity Rating of 'LS-3' -- Class Ca (ISIN XS0258052165): downgraded to 'BB' from 'BBB'; Outlook Negative; assigned Loss Severity Rating of 'LS-4' -- Class Cc (ISIN XS0261199284): downgraded to 'BB' from 'BBB'; Outlook Negative; assigned Loss Severity Rating of 'LS-4' -- Class D (ISIN XS0258052751): downgraded to 'B' from 'BB'; Outlook Negative; assigned Loss Severity Rating of 'LS-4' Landmark Mortgage Securities No.2 Plc: -- Class Aa (ISIN XS0287189004): downgraded to 'AA' from 'AAA'; Outlook Negative; assigned Loss Severity Rating of 'LS-1' -- Class Ac (ISIN XS0287192727): downgraded to 'AA' from 'AAA'; Outlook Negative; assigned Loss Severity Rating of 'LS-1' -- Class Ba (ISN XS0287192131): downgraded to 'BB' from 'BBB+'; Outlook Negative; assigned Loss Severity Rating of 'LS-3' -- Class Bc (ISIN XS0287193451): downgraded to 'BB' from 'BBB+'; Outlook Negative; assigned Loss Severity Rating of 'LS-3' -- Class C (ISIN XS02871922141): downgraded to 'B' from 'BB-'; Outlook Negative; assigned Loss Severity Rating of 'LS-4' -- Class D (ISIN XS0287192644): downgraded to 'CC' from 'CCC'; Recovery Rating revised to 'RR5' from 'RR1' LLOYDS BANKING: May Have to Pay "Break Fee" From Insurance Scheme ----------------------------------------------------------------- Patrick Jenkins and Sharlene Goff at The Financial Times report that Lloyds Banking Group plc has been told by ministers that it will have to pay at least GBP1 billion as a form of "break fee" if it proceeds with its plan to exit a scheme to insure GBP260 billion of its assets. According to the FT, one person familiar with the government's stance on the issue said that a GBP1 billion fee, which would be paid in lieu of the support already provided to Lloyds, was "definitely the floor". The FT says given that the insurance scheme was intended to run for five years, the six months of unwritten guarantees on the assets supplied to Lloyds would equate logically to a fee of GBP1.6 billion. Sale Talks The FT relates Lloyds confirmed that it was in talks to sell Halifax Estate Agencies to LSL Property Services. Halifax's estate agency business has 218 branches centered in the Midlands and North, the FT discloses. On Oct. 13, 2009, the Troubled Company Reporter-Europe, citing Bloomberg News, reported Lloyds said last month it was considering pulling out of the asset protection program. Bloomberg disclosed under the Asset Protection Scheme, the government would insure GBP260 billion of Lloyds' assets in return for a GBP15.6-billion fee. To pay the fee, Lloyds would hand additional shares to the Treasury, boosting the state's stake to 62%, Bloomberg said. Lloyds is seeking to reduce the government's holding because the European Union may force it to sell assets or branches to comply with state aid rules, According to Bloomberg. About Lloyds Banking Group PLC Lloyds Banking Group PLC, formerly Lloyds TSB Group plc, (LON:LLOY) -- http://www.lloydsbankinggroup.com/-- is a United Kingdom-based financial services group providing a range of banking and financial services, primarily in the United Kingdom, to personal and corporate customers. The Company operates in three divisions: UK Retail Banking, Insurance and Investments, and Wholesale and International Banking. Its main business activities are retail, commercial and corporate banking, general insurance, and life, pensions and investment provision. The Company also operates an international banking business with a global footprint in 40 countries. Services are offered through a number of brands, including Lloyds TSB, Halifax, Bank of Scotland, Scottish Widows, Clerical Medical and Cheltenham & Gloucester. On January 16, 2009, Lloyds Banking Group plc acquired HBOS plc. MERCHANT INNS: In Administration; Deloitte on Board --------------------------------------------------- Dominic Walsh at The Times reports that Merchant Inns Ltd., the business set up by Sir John Ritblat two years ago as a joint venture with Robert Breare, has gone into administration. According to the report, administrators from Deloitte stated that they had been appointed after "the discovery of a number of previously unknown financial liabilities". The report relates the appointment of administrators comes a few weeks after Mr. Breare quit the business after what was described as "an angry and fundamental dispute" over strategy. It is believed that while Sir John wanted to slow down expansion, Mr. Breare was keen for Merchant Inns to carry on growing, the FT notes. Merchant Inns Ltd. -- http://www.merchant-inns.com/-- is a privately owned company focused on purchasing and restoring freehold inns in mainly rural but easily accessible locations throughout the UK. ROYAL BANK: Mulls Disposal of 312 Branches in England and Wales --------------------------------------------------------------- George Parker, Patrick Jenkins and Nikki Tait at The Financial Times report that Royal Bank of Scotland is exploring a government-backed plan to give up all of its 312 RBS-branded branches in England and Wales. According to the FT, officials close to the negotiations say the plan -- mediated by the Treasury -- is well advanced and is the favored proposal being considered by Neelie Kroes, EU competition commissioner. Ms. Kroes, the FT discloses, has demanded substantial disposals by RBS to compensate for the billions of pounds of taxpayer support it has received and its planned participation in the Treasury's toxic asset insurance scheme. In particular, Brussels is keen to see a 10% reduction in RBS's small business banking operations, the FT notes. The FT relates RBS said Monday night that it was "co-operating with the Treasury and working towards a solution with the European Commission". On Aug. 10, 2009, the Troubled Company Reporter-Europe, citing Bloomberg News, reported RBS posted a net loss of GBP1.04 billion in the first half of 2009, compared with GBP827 million a year earlier after setting aside GBP7.52 billion (US$12.62 billion) to cover bad loans and declining assets. Bloomberg said about 70% of RBS's losses came from its so-called non-core division, which includes assets the bank plans to sell or discontinue. According to Bloomberg, the bulk of the division is comprised of parts of the global banking and markets businesses, which include propriety trading and higher risk assets. The government owns 70% of RBS after it invested GBP20 billion last year to rescue the bank. About RBS The Royal Bank of Scotland Group plc (NYSE:RBS) -- http://www.rbs.com/-- is a holding company of The Royal Bank of Scotland plc (Royal Bank) and National Westminster Bank Plc (NatWest), which are United Kingdom-based clearing banks. The company's activities are organized in six business divisions: Corporate Markets (comprising Global Banking and Markets and United Kingdom Corporate Banking), Retail Markets (comprising Retail and Wealth Management), Ulster Bank, Citizens, RBS Insurance and Manufacturing. On October 17, 2007, RFS Holdings B.V. (RFS Holdings), a company jointly owned by RBS, Fortis N.V., Fortis SA/NV and Banco Santander S.A. (the Consortium Banks) and controlled by RBS, completed the acquisition of ABN AMRO Holding N.V. (ABN AMRO). In July 2008, the company disposed its entire interest in Global Voice Group Ltd. ROYAL BANK: Mass Resignation at RBS Coutts Singapore Branch ----------------------------------------------------------- Reuters reports that more than a quarter of the staff at the Singapore office of private bank RBS Coutts, part of Royal Bank of Scotland Group Plc, have quit in a mass resignation. According to Reuters, RBS Coutts said on Tuesday "a little over 70 people" had resigned from the bank. The departures come a few months after Hanspeter Brunner, former co-CEO of RBS Coutts, and Raj Sriram, head of its South Asia unit, left the wealth manager to join Swiss rival BSI, Reuters relates citing unnamed sources. Reuters says factors contributing to the exodus of RBS Coutts employees include moves by parent RBS to defer staff bonuses as well as concerns about asset sales by RBS in Asia. An RBS Coutts spokesman in Singapore told Reuters that the staff who left were about 28% of the Singapore staff and 15% of the wealth manager's Asia staff. He did not say why the staff left, Reuters adds. Reuters, meanwhile, reports that RBS Coutts spokesman said the bank plans to hire 200 more staff in Asia over the next five years and aims to double its assets in the same period. Currently it has a staff of 500 and manages CHF17 billion (US$16.6 billion) in Asia. On Aug. 10, 2009, the Troubled Company Reporter-Europe, citing Bloomberg News, reported RBS posted a net loss of GBP1.04 billion in the first half of 2009, compared with GBP827 million a year earlier after setting aside GBP7.52 billion (US$12.62 billion) to cover bad loans and declining assets. Bloomberg said about 70% of RBS's losses came from its so-called non-core division, which includes assets the bank plans to sell or discontinue. According to Bloomberg, the bulk of the division is comprised of parts of the global banking and markets businesses, which include propriety trading and higher risk assets. The government owns 70% of RBS after it invested GBP20 billion last year to rescue the bank. About RBS Coutts RBS Coutts Bank Ltd -- http://www.rbscoutts.com/-- is the international private banking arm of The Royal Bank of Scotland Group. The Bank offers tailored wealth management solutions as well as trust and fiduciary services. About RBS The Royal Bank of Scotland Group plc (NYSE:RBS) -- http://www.rbs.com/-- is a holding company of The Royal Bank of Scotland plc (Royal Bank) and National Westminster Bank Plc (NatWest), which are United Kingdom-based clearing banks. The company's activities are organized in six business divisions: Corporate Markets (comprising Global Banking and Markets and United Kingdom Corporate Banking), Retail Markets (comprising Retail and Wealth Management), Ulster Bank, Citizens, RBS Insurance and Manufacturing. On October 17, 2007, RFS Holdings B.V. (RFS Holdings), a company jointly owned by RBS, Fortis N.V., Fortis SA/NV and Banco Santander S.A. (the Consortium Banks) and controlled by RBS, completed the acquisition of ABN AMRO Holding N.V. (ABN AMRO). In July 2008, the company disposed its entire interest in Global Voice Group Ltd. TATA MOTORS: Raises US$750 Mln Through GDS, Convertible Notes Sale ------------------------------------------------------------------ Tata Motors Limited has issued 29,904,306 new equity shares in the form of Global Depositary Shares at a price of US$12.54 per GDS, aggregating US$375 million and 3,750, 4% coupon convertible notes due 2014 at a price of $100,000 per Note, aggregating US$375 million. The GDSs and Notes, together aggregating US$750 million, will be listed on the Luxembourg Stock Exchange. The Offering was successfully executed against the backdrop of volatile equity market conditions with strong investor interest resulting in the book being closed in less than an hour from launch generating a demand of US$1.25 billion from 40 investors. The deal size was upsized from a base $600 million to $750 million. The GDS pricing represents a tight 1.5% discount to the closing price on Oct 8, 2009 of INR589.25, while the Notes were issued at a 7.5% conversion premium over the GDR price with a yield to maturity of 5.5%. Citigroup Global Markets, Credit Suisse and JP Morgan are acting as joint bookrunners for the Offering. Tata Motors intends to use the net proceeds from this offering for repayment of debt incurred in connection with the acquisition of Jaguar Land Rover, the outstanding of which stands at US$700 million and for other purposes such as capital expenditure, working capital and other general corporate purposes. Mr. Ravi Kant, Vice Chairman of Tata Motors, said "This is a significant milestone for Tata Motors. This transaction is a re- affirmation of investor confidence in the automotive sector and bears testimony to the trust reposed in the long term outlook and performance of Tata Motors." Mr. C. Ramakrishnan, Chief Financial Officer of Tata Motors, said "We are delighted with the outcome. The offering will augment our long term resources, help us de-leverage and provide us the financial flexibility to pursue our strategic goals." The Offering is expected to settle on October 15, 2009, subject to customary closing conditions. India's largest automobile company, Tata Motors Limited -- http://www.tatamotors.com/-- is mainly engaged in the business of automobile products consisting of all types of commercial and passenger vehicles, including financing of the vehicles sold by the company. The company's operating segments consists of Automotive and Others. In addition to its automotive products, it offers construction equipment, engineering solutions and software operations. TML is listed on the Bombay Stock Exchange, the National Stock Exchange of India and New York Stock Exchange. It was ultimately 33.4% owned by the Tata Group as of December 2007. Tata Motors has operations in Russia and the United Kingdom. * * * As reported in the Troubled Company Reporter-Asia Pacific on Aug. 6, 2009, Standard & Poor's Ratings Services said that it had lowered its long term corporate credit rating on India-based Tata Motors Ltd. to 'B' from 'B+'. The outlook is negative. At the same time, Standard & Poor's lowered the issue rating on the company's senior unsecured notes to 'B' from 'B+'. Both ratings were removed from CreditWatch, where they were placed with negative implications on December 18, 2009, and refreshed in March 2009. WHITE YOUNG: Defers Test Date for Financial Covenants ----------------------------------------------------- Ed Hammond at The Financial Times reports that White Young Green plc said the test date for its financial covenants had been deferred. According to the FT, the deferment until October 31 is the fourth time WYG has put on hold the tests, which were initially due to be carried out on the year ending July 4, as it continues to struggle under a heavy debt burden. The FT relates WYG said discussions regarding its financing had made "significant progress" and were at "an advanced stage". The company, as cited by the FT, said "the proposals are subject to some further negotiation and final agreement between the parties". As reported in the Troubled Company Reporter-Europe on Aug. 27, 2009, the FT said WYG warned that debt talks with its banks would be likely to lead to a "material dilution" for existing shareholders. The FT disclosed the company also warned that due to the scale of the potential dilution, it may fall foul of London Stock Exchange rules on free float, so its shares may no longer be able to trade on the main market. At December 31, the group had net debt of GBP91.5 million, according to the FT. About White Young Green plc Headquartered in Leeds, White Young Green plc -- http://www.wyg.com/-- operates as a consultant to the built, natural and social environment. WYG provides a range of complementary engineering services to clients covering all key engineering disciplines and many associated specialist skills. It offers non-design-related management services, including project management, property management, cost management, dispute resolution, health and safety management, security consultancy and socio- economic advisory services. The Company provides environmental services to clients, including noise, air and water quality, environmental management systems, ecology, environmental impact assessments, waste management, landscape and urban design, pollution control, geotechnical investigations, asbestos surveys and contaminated land remediation services. * UK: PwC Says Pace of Corporate Failures Slowing ------------------------------------------------- Anousha Sakoui at The Financial Times reports that accounting firm PWC said the pace of U.K. corporate failures in recent months had slowed. The FT relates PwC said national insolvencies in August totaled 1,384, the lowest month on record since September 2008, while the latest figures, which are to mid-September, indicate that numbers are still falling, The level of insolvencies remains above those registered in August 2008 (1,200), before the collapse of Lehman Brothers, the FT notes. "We are finally seeing a tail-off to the huge numbers of insolvencies this recession has brought," the FT quoted Mike Jervis, at PwC Business Recovery Services, as saying. According to the FT, insolvency specialists have warned that companies remain as vulnerable coming out of recession as they do going in and that the number going through financial restructuring was likely to increase as the economy recovers and lenders feel more confident about their outlook. Mr. Jervis, as cited by the FT, said "If we look back at previous recessions, we can see that there is often a spike in the number of companies going bust as an economy recovers -- simply because businesses take their eye off the key factor: cash." * UK: Aim Delistings Slowing, Statistics Show --------------------------------------------- David Blackwell at The Financial Times reports that the number of departures from Aim appears to be slowing, partly as fewer small listed companies run into financial stress or insolvency. The latest statistics for the junior market show that the number of delistings was at the lowest level for any month this year, with 15 companies leaving the market in September, the FT discloses. The FT says this year, 215 companies have delisted from Aim, compared with a total of 258 for the whole of 2008. According to the FT, research published Monday by Trowers & Hamlins, the law firm, and UHY Hacker Young, the accountancy group, identifies the number of companies delisting in the third quarter because of financial stress or insolvency as 41% of the total. Charles Wilson, a partner at Trowers, says financial stress is now the dominant cause of Aim delistings, the FT notes. "This is a stark indication of the impact the recession has had on businesses and an explicit reminder we are not in the clear just yet," the FT quoted Mr. Wilson as saying. =============== X X X X X X X X =============== * Upcoming Meetings, Conferences and Seminars --------------------------------------------- Oct. 2, 2009 AMERICAN BANKRUPTCY INSTITUTE ABI/GULC "Views from the Bench" Georgetown University Law Center, Washington, D.C. Contact: http://www.abiworld.org/ Oct. 7-9, 2009 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention JW Marriott Desert Ridge, Phoenix, Arizona Contact: 312-578-6900; http://www.turnaround.org/ Oct. 20, 2009 AMERICAN BANKRUPTCY INSTITUTE NCBJ/ABI Educational Program Paris Las Vegas, Las Vegas, Nev. Contact: http://www.abiworld.org/ Dec. 3-5, 2009 AMERICAN BANKRUPTCY INSTITUTE 21st Annual Winter Leadership Conference La Quinta Resort & Spa, La Quinta, California Contact: 1-703-739-0800; http://www.abiworld.org/ Feb. 21-23, 2010 INSOL International Annual Regional Conference Madinat Jumeirah, Dubai, UAE Contact: 44-0-20-7929-6679 or http://www.insol.org/ Apr. 29-May 2, 2010 AMERICAN BANKRUPTCY INSTITUTE Annual Spring Meeting Gaylord National Resort & Convention Center, Maryland Contact: 1-703-739-0800; http://www.abiworld.org/ June 17-20, 2010 AMERICAN BANKRUPTCY INSTITUTE Central States Bankruptcy Workshop Grand Traverse Resort and Spa, Traverse City, Michigan Contact: 1-703-739-0800; http://www.abiworld.org/ July 7-10, 2010 AMERICAN BANKRUPTCY INSTITUTE Northeast Bankruptcy Conference Ocean Edge Resort, Brewster, Massachusetts Contact: 1-703-739-0800; http://www.abiworld.org/ July 14-17, 2010 AMERICAN BANKRUPTCY INSTITUTE Southeast Bankruptcy Conference The Ritz-Carlton Amelia Island, Amelia, Fla. Contact: http://www.abiworld.org/ Aug. 5-7, 2010 AMERICAN BANKRUPTCY INSTITUTE Mid-Atlantic Bankruptcy Workshop Hyatt Regency Chesapeake Bay, Cambridge, Maryland Contact: 1-703-739-0800; http://www.abiworld.org/ Oct. 6-8, 2010 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention JW Marriott Grande Lakes, Orlando, Florida Contact: http://www.turnaround.org/ Dec. 2-4, 2010 AMERICAN BANKRUPTCY INSTITUTE 22nd Annual Winter Leadership Conference Camelback Inn, Scottsdale, Arizona Contact: 1-703-739-0800; http://www.abiworld.org/ Mar. 31-Apr. 3, 2011 AMERICAN BANKRUPTCY INSTITUTE Annual Spring Meeting Gaylord National Resort & Convention Center, Maryland Contact: 1-703-739-0800; http://www.abiworld.org/ June 9-12, 2011 AMERICAN BANKRUPTCY INSTITUTE Central States Bankruptcy Workshop Grand Traverse Resort and Spa Traverse City, Michigan Contact: http://www.abiworld.org/ Dec. 1-3, 2011 AMERICAN BANKRUPTCY INSTITUTE 23rd Annual Winter Leadership Conference La Quinta Resort & Spa, La Quinta, California Contact: 1-703-739-0800; http://www.abiworld.org/ ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than US$3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Thursday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/booksto order any title today. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter -- Europe is a daily newsletter co- published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland USA. Valerie C. Udtuhan, Marites O. Claro, Rousel Elaine C. Tumanda, Joy A. Agravante and Peter A. Chapman, Editors. Copyright 2009. All rights reserved. ISSN 1529-2754. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Europe subscription rate is US$625 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Christopher Beard at 240/629-3300. * * * End of Transmission * * *